VANCOUVER, British Columbia and FAIRFIELD, N.J., July 14, 2015 /PRNewswire/ -- TIO Networks Corp., (TSX-V: TNC) ("TIO"), North America's leading cloud-based bill payment processor, today announced it entered into an arm's length agreement (the "Acquisition Agreement") to acquire Softgate Systems, Inc. ("Softgate"), a New Jersey corporation and a leading provider of consumer retail bill payment solutions. The acquisition is expected to close later this year subject to satisfying applicable regulatory approvals and satisfaction of customary closing conditions.
Total value of the transaction is approximately USD$31 million consisting of: (i) A cash component of up to USD$5 million; (ii) A USD$5 million promissory note (subject to adjustment); (iii) issuance of 25 million TIO shares to the Softgate Shareholders; and (iv) assumption of approximately USD$2.5 million of net debt based on balance sheet at signing.
The transaction is transformational and positions TIO as the largest North American provider of walk-in bill payment services, through its wholly owned subsidiaries which would include Softgate, as well as making TIO one of the leading providers of payment processing and receivables management to national and regional utility, wireless, and cable bill issuers in North America. With the addition of Softgate, TIO will have an augmented national platform from which to provide extensive non-bank financial services to the unbanked, under-banked, and unhappily banked millennial population.
On a pro-forma basis the combined companies have trailing 12-month revenues of more than CAD$100 million. Softgate's calendar year 2014 revenues grew 18% to USD$36 million as compared to the previous year. TIO expects that the enhanced processing scale of the combined companies as well as revenue and integration synergies will generate USD$5 million in incremental EBITDA per year.
"We're very excited to welcome Softgate as well as its valued management, employees, partners and clients to the TIO Family," said Hamed Shahbazi, CEO of TIO Networks. "TIO and Softgate have been commercial partners for more than eight years, and we have been very impressed with how the company has evolved and built a well-diversified national network of walk-in locations. This is a significant step for TIO and will be a launching point to bring our services to a much larger segment of the United States. TIO and Softgate was always a natural combination based on our cultural alignment and our years of commercial collaboration."
"We're excited to join forces with TIO and create a new emerging competitor in the multi-channel bill payment and receivables processing marketplace," said Rick Auletta, CEO of Softgate. "We look forward to working with the TIO team to meet the growing financial needs of bill issuers across the country. Between our respective competencies, it is clear that both TIO's and Softgate's customers will really benefit from the skill and scale enhancements brought about by this unique combination."
In addition, TIO has agreed to appoint Joe Allegra from Edison Partners and Steve Piaker from Napier Park Global Capital to its board upon the closing of the transaction.
"We're looking forward to joining TIO's board and helping the company continue its growth path. TIO's team has shown a strong ability to allocate capital smartly and grow shareholder value," said in a statement issued by Joe Allegra and Steve Piaker.
Financial Technology Partners LP and FTP Securities LLC served as exclusive financial and strategic advisor to Softgate in this transaction.
A conference call to discuss the acquisition will be held today, Tuesday July 14 at 1:30 pm EST, 10:30am PST.
To participate in the call please dial 416-204-9498 in Toronto or Toll free 1-800-505-9573 and request the TIO Networks Conference ID 1510775.
About TIO Networks
TIO is a multi-channel cloud-based bill payment processor serving the largest telecom, wireless, cable, and utility bill issuers in North America. With more than 70,000 endpoints, TIO symbolizes fast, convenient and secure bill payment services.
About Softgate Systems
Softgate provides reliable walk-in bill payment, domestic and international prepaid wireless, prepaid long distance, international top-ups and international bill payments through their PayXchange service. Established in 1993, Softgate connects world-class service providers and consumers through one of the largest networks of independent retail-based payment centers in the US.
For more information, visit www.softgatesystems.com
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FORWARD-LOOKING INFORMATION AND DISCLAIMERS
This news release contains certain forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws, including, without limitation, the planned acquisition by TIO of Softgate and its operating business and the timing thereof; the effect of the acquisition on TIO including the expected strengthening of TIO's position in the bill payment industry providing TIO with a comprehensive national footprint; the nature of expected synergies; the expected market for the companies; the expected higher revenues and gross margins; the expected increase in the percentage of revenues; the expanded revenue base; the anticipated accretive nature of the transaction; the formation of a key market leader; Joe Allegra and Steve Piaker joining the TIO board; and the amount and nature of the final consideration. Forward-looking statements, which may be identified by words including, without limitation, "will", "anticipated", "expected", "to create", "to make", "to join", "look forward", and other similar expressions, are intended to provide information about management's current plans and expectations regarding the Acquisition.
Although TIO believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties that may cause actual results or events to differ materially from those anticipated and no assurance can be given that these expectations will be realized, and undue reliance should not be placed on such statements. Risk factors that could cause actual results or events to differ materially from the forward-looking statements include, without limitation, that TIO's assumptions in making forward-looking statements may prove to be incorrect; the Acquisition may not close as anticipated or at all; that TIO may not be able to obtain sufficient financing to close; that required regulatory approvals may not be obtained; risks relating to the satisfaction of the conditions to closing the Acquisition and the related financing arrangements; that future results may vary from historical results; and that market competition may affect the outcome of the Acquisition and the business, results and financial condition of TIO post-Acquisition.
Certain material factors or assumptions are applied in making the forward-looking statements, including, without limitation, the assumption that future results, including without limitation, sales and financial results, will be similar to past results; the expectation related to future general economic and market conditions; the assumption that no adverse material changes will occur in the business to be acquired or the markets in general; the assumption that all required regulatory approvals will be obtained; and the assumption that the timing of events will occur as anticipated. Forward-looking statements and information are based on the beliefs, assumptions and expectations of TIO's management on the date of this news release, and TIO does not assume any obligation to update any forward-looking statement or information should those beliefs, assumptions or expectations, or other circumstances change, except as required by securities law.
Any websites referenced or linked in this press release are for convenience only and TIO does not endorse such websites nor assume any liability for the information contained therein. The information contained in this press release regarding Softgate and its board, investors and management team has been provided solely by Softgate and TIO disclaims any liability with respect to such information.
SOURCE TIO Networks Corp.