29th Jul 2005 07:39
Billing Services Group Limited29 July 2005 29 July 2005 Billing Services Group Limited ("BSG" or "the Company") Acquisition of EDS Interoperator Services GmbH together with certain associated contracts ("EDS IOS") Placing of 72,000,000 new Common Shares (the "Placing Shares") at 78 pence per Placing Share by Evolution Securities Limited ("Evolution Securities") New Senior Credit Facility and Mezzanine Facility arranged and underwritten by Goldman Sachs in the amount of €115 million Transaction Highlights • BSG announces the acquisition of EDS Interoperator Services GmbH("EDS IOS") for a total consideration of €155m (£107m). • EDS IOS is a leading pan European wireless telecommunicationsclearing house based in Russelsheim, Germany, with 120 customers. In the yearended 31 December 2004, EDS IOS recorded turnover of €32.3 million and EBITDA of€19.6 million. • The Acquisition marks the first step in BSG's strategy of Europeanexpansion stated at the time of its admission to AIM in June 2005. • The Acquisition is highly complementary in terms of geography,customer base and business processes and the directors of BSG believe that thecombined business will be well placed to deliver mission critical services toboth wireless and wireline customers as the telecommunications market becomesincreasingly complex and convergent services prevail. • The Acquisition is to be financed by a placing by EvolutionSecurities of 72,000,000 new common shares of US$1.00 each at 78 pence percommon share, raising £56.2 million (€80.9 million) before expenses and a newdebt facility totalling €115 million (£79.9 million) arranged by Goldman Sachs(the "New Facility"). • Current trading in BSG's existing core US wireline business remainsstrong and is currently ahead of management's expectations at the time of BSG'sadmission to trading on AIM. Pat Haynes, Chief Executive Officer of BSG, commented that: "We are delighted to be able to announce the acquisition of EDS IOS in line withour growth strategy announced at the time of our IPO. The Acquisition uniquelypositions BSG for network convergence and next-generation service offerings, aswell as enhances our global presence and we look forward to working with EDS IOSon delivering further growth in the future." For further information, please contact: Billing Services Group Limited + 1 847 832 0077 Patrick J. Haynes III, CEOMichael Labedz, COO Evolution Securities Limited + 44 (0)20 7071 4300 Michael BrennanStuart Andrews Cardew Group + 44(0) 20 7930 0777 Tim RobertsonAlex Pettifer Information on BSG Billing Services Group Limited provides third-party billing clearing andinformation management services to the telecommunications industry. The companyis headquartered in Texas and employs over 130 people. On 15 June 2005, BSGlisted on the AIM market. The Group maintains contractual billing arrangements with local telephonecompanies or LECs that provide access lines to, and collect payments forservices from, their end users of telecommunications services. The Groupprocesses telephone call records and other transactions on behalf of itscustomers and collects the related end-user charges from the LECs on behalf ofthese customers. In the year ended 31 December 2004, BSG recorded revenues of $141.3 million andEBITDA of $30.3 million. 29 July 2005 Billing Services Group Limited ("BSG" or "the Company") Acquisition of EDS Interoperator Services GmbH together with certain associated contracts ("EDS IOS") Placing of 72,000,000 new Common Shares (the "Placing Shares") at 78 pence per Placing Share by Evolution Securities Limited ("Evolution Securities") New Senior Credit Facility and Mezzanine Facility arranged and underwritten by Goldman Sachs in the amount of €115 million Introduction The Company is pleased to announce that it has signed an agreement to acquireEDS IOS from EDS Operations Services GmbH for a total consideration of €155million (£107 million) (the "Acquisition"), payable as to €125 million (£86.8million) on completion and €30 million (£20.8 million) upon fulfilment ofcertain conditions. The Acquisition marks the first step in BSG's strategy ofEuropean expansion stated at the time of its admission to AIM in June 2005. The initial consideration of €125 million (the "Initial Consideration") and theexpenses associated with the Acquisition are to be financed by a placing byEvolution Securities of 72,000,000 new common shares of US$1.00 each at 78 penceper common share (the "Placing Price" and the "Placing" respectively), raising£56.2 million (€80.9 million) before expenses and by drawing down €55 million(£38.2 million) of a new debt facility totalling €115 million (£79.9 million)arranged by Goldman Sachs (the "New Facility"). The balance of the New Facilitywill be drawn down upon the fulfilment of those conditions that give rise to thedeferred consideration. The Initial Consideration is payable on completion, which is expected to occurby 15 August 2005. Application will be made for the Placing Shares to beadmitted to trading on AIM, a market operated by the London Stock Exchange("Admission"). It is expected that Admission will become effective and thattrading in the Placing Shares will commence by no later than 16 August 2005. The Placing Price represents a discount of approximately 13.8 per cent to theprevailing middle market price of 90.5 pence per common share immediately priorto this announcement. Information on EDS IOS EDS IOS is a leading pan European wireless telecommunications clearing housebased in Russelsheim, Germany, with 120 customers, and has also recently startedan expansion programme into other emerging markets, particularly Asia, which thedirectors expect to experience growth over the medium term. Whilst BSG's currentbusiness is focused on the US wireline sector of the telecommunicationsindustry, EDS IOS's expertise is the wireless sector where it has a trustedbrand. Both businesses pursue similar operating models working with theircustomers under long term contracts using propriety systems and scalableinfrastructure. The Acquisition is highly complementary in terms of geography, customer base andbusiness processes and the directors of BSG believe that the combined businesswill be well placed to deliver mission critical services to both wireless andwireline customers as the telecommunications market becomes increasingly complexand convergent services prevail. In recent years EDS IOS has shown strong revenue and profitability growth and inthe year ended 31 December 2004, EDS IOS recorded turnover of €32.3 million andEBITDA of €19.6 million. As at 31 December 2004 EDS IOS had total assets of€95.7 million. The business employs approximately 120 employees, all of whomwill be staying with the business, including the current management team. Reasons for the Acquisition The Acquisition represents a good strategic fit for BSG's vision and growthopportunities and as well as having an attractive core business with growthprospects. It is anticipated that it will significantly enhance BSG's globalpresence and infrastructure. Whilst the wireless and wireline technology platforms will not be integrated atthis point in time, the Acquisition will enable the enlarged group to leverageprocessing and administrative infrastructure and presents the enlarged groupwith immediate cross selling opportunities on both sides of the Atlantic. Current Trading Current trading in BSG's existing core US wireline business remains strong andis currently ahead of management's expectations at the time of BSG's admissionto trading on AIM. EDS IOS's most recent management accounts show that EDS IOSis trading in line with its management's expectations. Summary of the Terms of the Share and Business Sale and Transfer Agreement Pursuant to the Share and Business Sale and Transfer Agreement (the "SaleAgreement") BSG, through an acquiring German subsidiary (the "Buyer"), willpurchase from EDS Operations Services GmbH (the "Seller") 100 per cent of theshares of EDS IOS and certain customer contracts not currently held in EDS IOS.The total purchase price for the shares and the contracts is €155 million, ofwhich €125 million is payable at completion and €30 million is payable upon thefulfilment of certain conditions. The Sale Agreement contains representations and indemnities from the Sellerwhich are customary in an Acquisition of this nature. The Seller's liabilityunder these representations and indemnities is limited to certain levels whichare also customary in an Acquisition of this nature. Completion of the Acquisition is conditional upon both the Seller and the Buyerfulfilling certain conditions customary in a transaction of this nature. TheSale Agreement is also conditional upon completion occurring on or before 15August 2005. The Buyer will have exclusivity until that time. The Buyer is the recipient of restrictive covenants in respect ofnon-solicitation of key employees and non-competition in respect of certainservices in certain jurisdictions. The Sale Agreement is governed by German law. The Buyer is also entering into a transition services agreement whereby theSeller will provide certain services to EDS IOS for a period of nine months fromcompletion. Summary of the Terms of the Placing The Company and Evolution Securities have today entered into a placing agreement(the "Placing Agreement") pursuant to which Evolution Securities Limited willuse its reasonable endeavours to place the Placing Shares at the Placing Priceas agent for the Company with institutional investors in the United Kingdom andfailing which, subject to the applicable provisions of the Placing Agreement,itself to subscribe for any such Placing Shares for which subscribers cannot befound. The Placing Agreement is conditional, inter alia, on Admission taking place onor before 16 August 2005 (or such later date as the Company and EvolutionSecurities Limited agree) and not being terminated in accordance with its terms. Evolution Securities has the right to terminate its obligations under thePlacing Agreement in the event of, inter alia, Evolution Securities becomingaware that any of the warranties contained therein was untrue, inaccurate ormisleading in a material respect (in each case, the reasonable opinion ofEvolution Securities Limited acting in good faith) when given, or would beuntrue, inaccurate or misleading in a material respect if then repeated byreference to the facts and circumstances subsisting from time to time. The Placing Shares shall be subscribed for free from all liens, charges,encumbrances, equities and other third party rights of any nature whatever withall rights of any nature whatever attaching or accruing to them. Summary of the Terms of the Debt Facility The Buyer (as defined above) has received financing commitments from affiliatesof Goldman Sachs under a senior credit facility (comprising a term loan B and arevolving credit facility) and a mezzanine facility arranged and underwritten byGoldman Sachs. The total amount of the facilities is €115m. The term loan B andmezzanine facility are to be utilised to finance the Acquisition and relatedexpenses and the revolving credit facility is to be utilised for workingcapital. The directors of BSG believe the rates that have been offered are in line withcurrent market rates. The facilities are subject to certain mandatory prepayment provisions and eventsof default which are customary in facilities of this nature. The Buyer is makingcertain representations and warranties and providing non-financial undertakingsand financial covenants which are also customary in facilities of this nature. The facilities will be guaranteed by the Company and certain members of theCompany's group, including the Buyer and EDS IOS. Security will be granted byvarious members of the Company's group, including the Buyer and EDS IOS. Availability of the New Facilities is conditional upon, inter alia, negotiationand execution of definitive loan and other financing documentation and thesatisfaction of certain conditions precedent to drawing. Note: €1.44:£1, approx. Evolution Securities Limited, which is a member of the London Stock Exchange andis authorised in the United Kingdom by the Financial Services Authority, isacting for the Company and no one else in connection with the Placing and willnot be responsible to anyone other than the Company for providing theprotections afforded to its customers or for providing advice to any otherperson in relation to the Placing, the contents of this announcement or for anyother matters or arrangements referred to therein. This announcement does not constitute or form part of an offer, or anysolicitation of an offer to subscribe or buy, any securities to any person inany jurisdiction to whom or in which such offer or solicitation is unlawful. Thedistribution for this announcement in certain jurisdictions may be restricted bylaw and therefore persons into whose possession this announcement comes shouldinform themselves about and observe any such restrictions. Any failure to complywith these restrictions may constitute a violation of the securities laws of anysuch jurisdiction. The information contained herein is not for publication or distribution in orinto the United States of America. These materials are not an offer ofsecurities for sale in the United States. The securities referred to herein havenot been and will not be registered under the U.S. Securities Act of 1933, asamended, and may not be offered or sold in the United States absent registrationunder the Act or an available exemption from registration. No public offering ofthe securities referred to herein will be made in the United States. The information contained in this announcement is not for publication ordistribution to persons in Japan, the Republic of Ireland, Canada or Australia. Prices and values of, and incomes from shares may go down as well as up and aninvestor may not get back the amount invested, it should be noted that pastperformance is no guide to future performance. Persons needing advice shouldconsult an independent financial adviser. Certain statements made in this announcement are forward-looking statements.Such statements are based on current expectations and, by their nature, aresubject to a number of risks and uncertainties that could cause actual resultsand performance to differ materially from any expected future results orperformance expressed or implied by the forward-looking statement. Theinformation and opinions contained in this announcement are subject to changewithout notice and Billing Services Group Limited assumes no responsibility orobligation to update publicly or revise any of the forward-looking statementscontained herein. Not for release, publication or distribution, in whole or in part, in or intothe United States, Japan, the Republic of Ireland, Canada or Australia. 29 July 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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