TORONTO, ONTARIO, July 24 / MARKET WIRE/ --
The following is an update to the press release issued on July 18, 2008 and is intended to provide the reader with greater information concerning the acquisition of Secure Payment Systems by EFT Canada (TSX VENTURE: EFT).
EFT Canada Inc. (TSX VENTURE: EFT), a publicly traded company based in Toronto, Ontario, as previously announced, entered into a Letter of Intent, dated July 11, 2008, to acquire privately held San Diego, California-based Secure Payment Systems Inc. ("SPS"), a leading provider of integrated electronic financial services to small and medium sized businesses in Canada, the United States and Mexico for a total purchase price of $5,993,577 USD. The acquisition is subject to certain customary conditions, as well as the completion and signing of a definitive agreement and approval by the TSX Venture Exchange.
SPS employs 34 full and part time staff and was founded in 1996 by Linden (Lin) Fellerman who remains the majority 85% shareholder and has 30 years of transaction processing experience. The remaining 15% ownership stake is held by six individuals with no direct or indirect relationship to EFT Canada. Lin is also a current member of EFT Canada's Board of Directors. For the 10 years prior to starting SPS, Lin had served as President of the Telecredit and Equifax Check Services subsidiaries (later known as Certegy Check Services and now owned by Fidelity National Information Services). An integral part of the acquisition is that Mr. Fellerman will enter into a formal employment agreement with EFT Canada and continue to operate SPS on a full time basis in the same capacity as CEO & President.
SPS provides its clients with a broad range of services including but not limited to electronic cheque approval, point-of-sale electronic cheque conversion, gift & rewards card processing, host & web-based ACH/EFT transaction clearing, and remote check image capture.
Through its network of 500 independent sales organizations, customer base exceeding 6,000 merchant locations, modular processing systems, and sophisticated risk management algorithms, for the year ended December 31, 2007, SPS reported unaudited gross revenues of $3,920,716 USD and net profit of $260,680 USD.
EFT Canada intends to acquire all of the outstanding shares of SPS for a purchase price of $5,993,577 USD by way of $2,612,500 USD in cash, $1,170,270 USD payable in common shares of EFT Canada at an issuance price of $0.435 CDN, and six vendor notes bearing 7% interest, in the amounts of $1,880,807 USD (three year) and $330,000 USD (one year) respectively. As is the case with most acquisitions, the purchase price will be allocated among the vendor shareholders by pro rating their percentage ownership.
On the closing date, SPS will have no outstanding long term debt or loan receivables, and the sellers will enter into a three year escrow agreement with 1/6 of the total shares being issued every six months. EFT Canada has not entered into any definitive financing arrangements at this time and will review various financing alternatives for the initial payment. This acquisition is conditional upon EFT Canada securing adequate financing and closing within 120 days.
As one of the vendors is a related party to EFT, since Mr. Fellerman is a director of EFT, this acquisition is considered a related party transaction under Multilateral Instrument 61-101 ("MI 61-101"). The valuation requirement set out in MI 61-101 applies to the acquisition since the value of the transaction is above certain financial thresholds set out in MI 61-101.
About EFT Canada
Founded in 2003, EFT Canada Inc. is a financial processing company that offers a complete solution to the collection and payment processing needs of small and medium sized business merchants, banks, credit unions, and other financial firms in Canada and the United States. The Company develops, maintains and delivers innovative electronic transaction processing technologies, such as customized electronic payment and collection processing solutions and gift and loyalty card services, by drawing on its operational and applications expertise.
About Secure Payment Systems, Inc.
Secure Payment Systems, Inc. (SPS) (www.securepaymentsystems.com) was founded in 1996 by Linden (Lin) Fellerman, former 20 year employee and 10 year President of the Telecredit / Equifax Check Services subsidiaries. He attributes this success, and Secure Payments Systems' growth rate, to unprecedented customer service levels that begin and end with a philosophy that empowers sales agents and employees while rewarding and encouraging unusual attention to detail. www.securepaymentsystems.com
This press release contains forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements involve risks and uncertainties. Actual results could differ significantly from those projected herein.
The TSX Venture Exchange has not reviewed and does not accept responsibility for adequacy or accuracy of the content of the information contained herein.
EFT Canada Inc.
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