Versapay Corp - Ordinary Shares VPYYF

VersaPay Enters Definitive Agreement for Sale of Merchant...

[Trelawny]

VersaPay Enters Definitive Agreement for Sale of Merchant Services Portfolio

TORONTO, Nov. 29, 2016 /CNW/ - VersaPay Corporation (TSXV: VPY) ("VersaPay" or the "Company"), is pleased to announce that it has entered into a definitive asset purchase agreement (the "Agreement") with BluePay Canada, LLC, a wholly owned subsidiary of BluePay Processing LLC ("BluePay") for the sale of all of the assets of its Merchant Services portfolio (the "Transaction").

Under the terms of the Agreement, VersaPay will sell, free of any encumbrances, all of the assets that comprise VersaPay's Merchant Services portfolio for cash consideration of C$10,000,000 payable on closing of the Transaction. On closing of the Transaction, $500,000 will be paid into an escrow account and held in escrow for a period of 12 months. An additional C$1,000,000 will be payable to VersaPay 12 months following closing of the Transaction, conditional upon achievement of 5% growth in VersaPay's Merchant Services portfolio over such 12-month period.

With VersaPay's primary focus on growing its business around ARC™, its cloud-based accounts receivable solution, the Company's Merchant Services business is no longer core to the Company's growth strategy. The sale of the portfolio allows the Company to focus on its core business, while providing additional growth capital. The proceeds from the Transaction will be deployed to accelerate expansion of the Company's software as a service business through increased investments in sales and marketing, the commercialization of partnerships, and R&D.

"This is an exciting time for VersaPay as we take this decisive step in becoming a pure play cloud-based software company," commented Craig O'Neill, Chief Executive Officer of VersaPay. "The combination of the progress we've made in our software business and this offer from BluePay that fairly reflects the value of the Merchant Services portfolio makes the timing right to make this pivotal move. In the past year, the number of sellers and buyers and their related transaction volume on the ARC™ platform has almost tripled, and more recently we've launched key channel partnerships that give us much greater market reach. The Transaction gives us the focus and the funding required to fully leverage these channel partnerships and develop new ones, as well as expand our direct sales efforts as we pursue the extensive market opportunity for A/R automation."

VersaPay's board of directors has determined that the Transaction is in the best interest of the Company and its shareholders and unanimously recommends that VersaPay shareholders vote in favour of the Transaction.

Management will discuss the Transaction at the Company's upcoming conference call on Wednesday, November 30, 2016 at 9:00 AM Eastern Time hosted by Craig O'Neill, Chief Executive Officer, and Harp Gahunia, Chief Financial Officer.

Shareholder Approval

The Transaction will require the approval of 66 2/3 percent of votes cast by shareholders of the Company at a special shareholders meeting (the "Special Meeting"). The Special Meeting will be held at the offices of Cassels Brock & Blackwell LLP on January 10, 2017 at 10:00 a.m. (Eastern time).

In addition to shareholder approval, the Transaction is subject to applicable regulatory approvals including TSX Venture Exchange ("TSXV") approval and the satisfaction of certain other customary closing conditions customary in transactions of this nature.

Further information regarding the Special Meeting and the Transaction will be included in the Company's management information circular (the "Circular") which is expected to be mailed to shareholders in December 2016 and can be found in the Agreement which will be filed under the Company's profile on SEDAR at www.sedar.com.

Assuming shareholder approval and that all other conditions to the Agreement are satisfied or waived, the Transaction is expected to close on or about January 11, 2017.

Advisors and Counsel

Preston Todd Advisors are acting as financial advisor to VersaPay with Cassels Brock & Blackwell LLP acting as its legal counsel.

About VersaPay

VersaPay is a leading cloud-based invoice presentment and payment provider for businesses of all sizes. VersaPay's ARC software-as-a-service offering allows businesses to easily deliver customized electronic invoices to their customers, to accept credit card and EFT payments and automatically reconcile payments to their ERP and accounting software. VersaPay is headquartered in Toronto, Canada and also has operations in Montreal.

More information about VersaPay can be found on the Company's website at www.versapay.com or under the Company's profile on SEDAR at www.sedar.com.

Forward Looking and Other Cautionary Statements

[Wallstreetjack]

This is a great move by Craig & co. Now they can put all resources towards growing ARC through signing suppliers and an expanded sales team. I expect 2017 to be a very big year for them and believe they should at least triple the number of end users to ~75k. The possibility of this bank deal seems very promising, which would likely send the stock price flying if they are able to secure it in

[ecomplayer]

We can't tell if this is a good deal as we haven't seen the pro forma P&L. If Versapay just sold off a book of business and retained the costs then we have a $2M a year business losing $6M a year unless they restructure.

[Wallstreetjack]

From what I understand from the conference call, there will be some cost savings from getting rid of the point of sale business but they will use those savings to ramp up S&M of ARC. They seem to have a lot in the pipeline between the tier-one bank, new channel/distribution partners and the direct sales team. I would imagine they hit ~2m in sales this year but triple by next year.