TIDMESG
RNS Number : 9095L
eServGlobal Limited
08 August 2011
eServGlobal Limited (eServGlobal or the "Company")
Results of Extraordinary General Meeting and Shareholder
Distribution
8 August 2011
eServGlobal Limited (ASX:ESV, AIM:ESG) announces that the sole
resolution in the notice of Extraordinary General Meeting held on 8
August 2011 was passed on a show of hands with the purpose of
returning capital to shareholders after the successful completion
of the sale of the Company's USP assets to Oracle in 2010.
We are pleased to announce that A$0.29 per share (A$57M) will be
distributed to all persons registered as holders of shares in the
Company as at 5.00pm (Sydney time) on the Record Date. The
distribution will be paid as a capital return of A$.16854 per share
and an A$0.12146 special dividend (franked amount A$0.0830 per
share). Key dates are outlined below:
Trading in shares on an ex- 10 August 2011
dividend and ex-return of capital
basis starts
Record Date 16 August 2011
---------------
Payment date for dividend and 23 August 2011
return of capital
---------------
As previously advised to the market, the Company sold its USP
business and assets to Oracle for A$106.7 million prior to purchase
price adjustments of A$3.6 million. Following the transaction,
A$23.6 million of sale proceeds was retained in escrow which was
due to be released in equal parts after the first year (on or
around 4 August 2011) with the remainder to be released after the
second year (on or around 4 August 2012) provided that funds were
available following any legitimate claims. As announced by ESV on 1
August 2011, an A$11.5m claim on the escrowed sale proceeds has
been received from Oracle. ESV strongly disagrees with the claims
made and considers those claims largely unsubstantiated. ESV has
now lodged an objection to the claims and intends to vigorously
defend them. In addition, ESV entered into a warranty and indemnity
insurance policy in respect of various provisions of the Oracle
related transaction documents and will continue to investigate
whether the alleged claims by Oracle are covered by that policy.
The immediate, practical implication of Oracle's purported claim,
however, is the delay of the release of a large portion of the
first part of the escrowed sale proceeds, pending the resolution of
this dispute.
In the past year, eServGlobal has undertaken significant
investments to wholly restructure the Company's cost base and to
invest in new technologies, platforms and markets. The Board and
Management are pleased with the progress made and the strong
financial position that the business is now in. We look forward to
the year ahead with confidence.
The Board has assessed ESV's working capital requirements for
the coming years in the context of its strategic development
strategy. In order not to risk or delay this strategy as a result
of Oracle's recent claim on a portion of the escrowed sale
proceeds, ESV's three largest shareholders (Guinness Peat Group,
Henderson, MHB/Halliday) (Shareholders) - all of whom have
representatives on the Board - have established a loan facility to
fund ESV's working capital requirements in the amount of A$14
million (Loan), pending the successful resolution of the dispute
with Oracle.
The Loan is a related party transaction with the parties
below:
MHB is an entity associated with both Mr Richard Mathews,
Chairman and Craig Halliday, Chief Executive Officer and
Director
Halliday, LLC is an entity associated with Mr Craig Halliday,
Chief Executive Officer and Director
Guinness Peat Group is an entity associated with Mr Anthony
Eisen, Non-Executive Director
Henderson is an entity associated with Mr Jamie Brooke,
Non-Executive Director
The independent directors consider, having consulted with the
Company's nominated adviser, that the terms of the Loan are fair
and reasonable insofar as the other shareholders are concerned and
further, that the Loan is on arm's length, commercial terms. The
independent directors resolved to enter into the Loan Agreement in
the absence of the other directors, who were conflicted as a result
of the related party nature of the Loan.
It is noteworthy that over one third of the Loan facility is
being provided by entities associated with the Chairman and
CEO.
Interest on the Loan is calculated and charged quarterly. The
Shareholders will have the option to be paid the interest in cash
or to capitalise the interest into the principal amount on the date
of each payment. Interest is charged at the rate of 9.75%. An
establishment fee of 2% is also payable by the Company. The Loan
Agreement contains standard representations and warranties and
events of default. The Loan is to be repaid to the Shareholders,
together with interest accrued but not paid on the earlier of: the
first escrow payment on the USP Business Sale Transaction being
released to the Company or the date which is 12 months from the
date of the Loan Agreement.
ESV has an option to extend the Loan Agreement for a further
term of 12 months should that become necessary in which case a
renewal fee of 2% will be payable.
The A$0.29 per share distribution approved by shareholders today
will be funded entirely from ESV's current cash balance.
Chairman Richard Mathews commented "It has been an interesting
journey in terms of returning proceeds of the transaction with
Oracle to shareholders. The first hurdle involved a detailed and
complex set of discussions with the ATO, then, as announced last
week, Oracle made a largely unsubstantiated claim in relation to
certain warranties and indemnities relating to the sale of ESV's
USP business. While these have been significant obstacles we
believe this return to shareholders, facilitated in part by the
recently established shareholders' Loan, once again demonstrates
the belief and commitment the Board and Management team have in
ESV's business and value proposition. I take this opportunity to
acknowledge the support of all of our shareholders and in
particular GPG, Henderson and MHB who have shown their continued
belief in the business and have done what great investors do - 'put
their money where their mouth is'.
The following proxy information is provided in respect of the
sole resolution put to the EGM in accordance with section 251AA of
the Corporations Act.
For Against Abstain At Proxy's Discretion
140,215,999 Nil Nil 15,000
-------- -------- ----------------------
About eServGlobal
eServGlobal specializes in Mobile Money solutions and
Value-Added Services (VAS), to help Telco Service Providers
increase their revenue and gain and maintain customer ownership.
eServGlobal invests heavily in product development, using
carrier-grade, next-generation technology aligned with the
requirements of more than 70 customers in over 45 countries.
With 13 offices globally, eServGlobal provides full "end-to-end"
and "any account to any account" Mobile Financial Services and
International Money Transfers. Our Value Added Services in
promotions, loyalty, messaging, and multiplay are focused around
the transaction and enable service providers to engage with the
subscriber in a personalized and dynamic manner.
To reduce time-to market and manage exposure to CAPEX, we now
offer multiple licensing alternatives, including SaaS-based
flexible, revenue-share pricing. eServGlobal is listed on the
Australian Securities Exchange (ESV) and the London Stock Exchange
AIM (ESG). More information at: www.eservglobal.com
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary T: +61 2 8280 7871
Info@eservglobal.com
Cenkos Securities plc www.cenkos.com
Ivonne Cantu/Stephen Keys (Nomad) T: +44 (0) 20 7397 8980
Threadneedle Communications www.threadneedlepr.co.uk
Caroline Evans--Jones/Josh Royston/Hilary T: +44 (0) 20 7653 9850
Millar
This information is provided by RNS
The company news service from the London Stock Exchange
END
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