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Xentel | | . | Press Release - March 6, 2003 |
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Xentel Enters into Arm’s-Length Negotiated Merger Agreement with Schroder Ventures US CALGARY, ALBERTA, March 6, 2003 - Xentel DM Incorporated (TSXV:XDM), a North American specialty entertainment and relationship marketing company, announced today that its board of directors has unanimously approved and authorized Xentel's entering into of a Merger Agreement with Schroder Ventures US ("SVUS"). Pursuant to such Merger Agreement, SVUS will, by way of a Xentel-securityholder and court approved Plan of Arrangement, pay Xentel shareholders Cdn. $2.00 for each share of Xentel held (and in-the-money amounts for outstanding options and warrants), which represents a premium in excess of 50% over the current market price. Also, pursuant to the Plan of Arrangement, Mike Platz (Chairman and Co-CEO) and Geoff Pickering (President and Co-CEO) will receive the same amount per share for approximately 28% of the aggregate number of shares they now hold. In exchange for their remaining shares, Messrs. Platz and Pickering will receive exchangeable shares and preferred shares that are convertible into common shares and debt, respectively, of a U.S. holding company owned by SVUS. Upon completion of the transactions contemplated by the Merger Agreement and the Plan of Arrangement, Messrs. Platz and Pickering will hold approximately 31%, and SVUS will hold approximately 69%, of the equity of the holding company, and the holding company will own Xentel. The Plan of Arrangement will require the approval of at least two-thirds of the votes cast by Xentel's securityholders (including shareholders, optionholders and warrantholders) at a meeting which is expected to be held in April. As the Plan of Arrangement will constitute a "going private transaction" under applicable securities laws, it must also be approved by a simple majority of the votes cast by securityholders excluding Messrs. Platz and Pickering and their affiliates or associates. The Plan of Arrangement will also require court approval. "We feel this is a great opportunity for our shareholders to realize on their investment in Xentel with strong returns in what is proving to be a volatile and uncertain market" stated Michael Platz, Chairman and Co-Chief Executive Officer of Xentel. "From the Company perspective, Schroder Ventures is a partner with proven strength that will assist us both strategically and financially in our relentless pursuit of growth within the North American market". In unanimously approving the arm's-length negotiated Merger Agreement, the board of directors of Xentel considered, among other things, the unanimous recommendation of the Special Committee and a fairness opinion provided by Acumen Capital Finance Partners Limited ("Acumen") that the Plan of Arrangement is fair, from a financial point of view, to the securityholders of Xentel. Acumen had also provided a formal valuation to the Special Committee and the board of directors indicating that as at December 31, 2002 the fair market value of Xentel was in the range of $1.80 to $2.06 per share. In addition to Acumen, Hunter Wise Financial Group, LLC has acted as advisor to Xentel. The Merger Agreement contains customary fiduciary-outs in the event of an unsolicited superior proposal, non-solicitation provisions and, under certain circumstances, a termination fee payable by Xentel to SVUS of its reasonable expenses and $800,000 or a percentage of the value of a superior transaction. SVUS also has the right under the Merger Agreement to match any such superior proposal. Simultaneously with Xentel's entering into of the Merger Agreement, Messrs. Platz and Pickering, who hold in the aggregate approximately 49% of Xentel's outstanding shares on a fully-diluted basis, have entered into a Voting Agreement whereby, in effect, they have agreed to vote their respective securities in favor of the Plan of Arrangement, subject to customary superior-proposal outs. Xentel expects to mail an Information Circular to its securityholders before March 31, 2002. The Plan of Arrangement, in addition to being subject to Xentel-securityholder and court approval, is also subject to applicable regulatory approvals and other customary closing conditions and is expected to be completed in May. Xentel has made an application to the TSX Venture Exchange to allow certain stock options of Xentel that expire on March 31, 2003 to, subject to disinterested shareholder approval, be extended to allow those optionholders to participate in the Plan of Arrangement. SVUS has consented to this application. If such approval is not received, SVUS will make a cash payment to optionholders equal to the in-the-money amount of the options. Xentel is one of North America's leading relationship-marketing concerns and producers of cause-related entertainment events. Its success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel has over 300 clients and 2,000 employees in 22 offices across North America, and is traded on the TSX Venture Exchange under the symbol XDM. SVUS is one of six affiliated international private equity organizations advising over $7.5 billion of funds under management in 11 offices located in North America, Europe and Asia. The firm is focused on middle market investment opportunities in the media, business services, communications and technology services sectors in partnership with management. SVUS is currently investing a $270 million fund. Further information can be found at www.svus.com. The TSX Venture Exchange has neither approved nor disapproved the contents of this announcement. For more information, please contact:
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