VENDTEK SYSTEMS INC. CLOSES SALE OF ITS CANADIAN BUSINESS TO PAYMENT SOURCE INC.
VendTek Systems Inc., effective Jan. 31, 2014, has closed the sale of substantially all of its Canadian business operations to Payment Source Inc. pursuant to an asset purchase agreement between the company and PSI dated Dec. 18, 2013. PSI is wholly owned by George DeMarchi, the company's former senior vice-president of Canadian operations.
Under the terms of the agreement, the company has sold the Canadian business (assets and associated liabilities) constituting its Now Prepay division to PSI in exchange for $4.5-million and the assumption of up to $1.5-million of working capital deficit, excluding cash and cash equivalents, for a total consideration of $6-million. Payment arrangements for the purchase price include:
A deposit of $200,000, which was paid to the company on Nov. 15, 2013;
A cash payment of $3.85-million and $24,142 in closing adjustments, which were paid at closing;
A further $450,000 to be paid within 90 days following the closing of the transaction.
The holdback is subject to further adjustment based on the working capital of the Canadian business being either less than negative $1.5-million at closing, in which case the purchase price will be reduced by the amount that the working capital is less than negative $1.5-million, or greater than negative $1-million at closing, in which case the purchase price will be increased by the amount that the working capital is greater than negative $1-million. Such adjustment will take place within 90 days following the closing of the transaction.
The transaction contemplated by the agreement required the approval of the shareholders of the company by way of a special resolution requiring two-thirds of the votes cast on the matter to vote in favour of the transaction. The company obtained such shareholder approval at an annual general and special meeting of its shareholders held on Jan. 28, 2014, when shareholders voted 99 per cent in favour of pursuing the transaction.
Effective on the closing, Mr. DeMarchi has resigned as senior vice-president of Canadian operations for the company. Mr. DeMarchi has played a pivotal role in the operation of the Canadian business, and the company anticipates a smooth transition with PSI going forward. The company thanks Mr. DeMarchi for his years of service to the organization and wishes him the very best in his new business endeavour.
The company intends to use the proceeds from the sale to support its continuing operations and to further its growth strategy in Brazil. The company believes that its Brazilian operation holds tremendous potential. This proposed transaction will allow the company to refocus its resources on this important growth opportunity while simplifying its overall operating structure. Over the long term, VendTek's strategy is to refocus on licensing its e-Fresh transaction processing software internationally and move away from the direct operating model, while retaining its established licensing relationships, as has been accomplished with this transaction.