Transaction Solutions International has entered into an Exclusive Option Agreement to purchase the remaining 75% of TSi India, subject to satisfactory completion of due diligence, shareholder approvals and an equity and/or debt raising. The completion payment for the purchase of the balance of TSi India shares is INR 2.44B (A$47.7M). TSi India operates within the highly lucrative Indian ATMs industry and financial technology sector, with an estimated addressable market size of US$10B pa by 2020.
Highlights:
- Transaction Solutions International Limited (TSN) has entered into an Exclusive Option Agreement to purchase the remaining ~75% balance of TSi India;
- Proposed 100% ownership interest in TSi India subject to exercise of the Option which will require satisfactory completion of due diligence, shareholder approvals and an equity and/or debt raising;
- Completion payment for the purchase of the balance of TSi India shares is INR 2.44bn (~AUS $47.7m)(1) ;
- TSi India is operating within the highly lucrative Indian ATMs industry and financial technology sector with an estimated addressable market size of ~US$10bn p.a. by 2020;
- TSi India currently owns and manages ~14,000 ATMs with current platform having capacity to support up to 50,000 ATMs.
1. BACKGROUND
Transaction Solutions International Limited (TSN) is pleased to announce that it and subsidiary companies have entered into an exclusive option agreement (Option Agreement) to acquire the remaining 75.11% stake of TSi India (Proposed Acquisition) from CX Partners controlled entities (Vendors).
2. KEY TERMS OF OPTION AGREEMENT
Under the Option Agreement, the Vendors (as the existing owners of the remaining balance of TSi India) have irrevocably granted to TSN an exclusive option (Option) to purchase all the remaining balance of TSi India’s shares not currently owned by TSN for a cash consideration of INR 2.44bn (~AUS $47.7m) (1).
TSN has an exclusive option period up to 14 February 2017 (being a 120 day period), during which it will complete due diligence investigations on TSi India and consider an equity and/or debt raising to fund the Proposed Acquisition. TSi India and the Vendors have agreed to no-shop and standstill restrictions during the Option period.
TSN has consulted with ASX concerning the Proposed Acquisition and TSN is required to obtain shareholder approval under Listing Rule 11.1.2 (substantial change to scale of activities) before exercising the Option. The nature of the transaction and the terms of an equity and/or debt raising to fund the Proposed Acquisition will likely require shareholder approvals by TSN in addition to the Listing Rule 11.1.2 shareholder approval.
TSN can extend the Option for a further 50 days if before the initial 120 day period (before 14 February 2017), it provides written notice to the Vendors that it will seek shareholder approval to exercise the Option and confirms it has financial commitments to complete the Proposed Acquisition.
After obtaining shareholder approval and undertaking a fundraising, TSN will be in a position to exercise the Option. There is no Option exercise fee. However, upon exercise of the Option, the parties are obliged to execute a share sale agreement (which has been agreed) by which TSN will complete the acquisition transaction by paying INR 2.44bn (~AUS $47.7m)1 within 10 business days of execution of the share sale agreement. Ownership of the balance of TSi India shares will pass to TSN or its nominated subsidiaries at completion.
As part of the Proposed Acquisition, TSN has entered into an agreement with the 2 key management executives of TSi India, Mohnish Kumar (CEO) and Deepak Verma (CFO). This agreement is conditional on the completion of the Proposed Acquisition of the remaining shares in TSI India and TSN shareholder approvals. Mohnish and Deepak currently hold a 7% ESOP pool of TSi India securities. These will be cancelled and replaced by TSN shares to Mohnish and Deepak representing 7% of the diluted share capital in TSN post-option transaction. Additionally, TSN is to issue TSN shares to Mohnish and Deepak representing 8% of the diluted share capital in TSN post-option transaction with the shares to be issued or to vest upon milestones and be subject to escrow. It is intended that Mohnish and Deepak will be offered director roles at TSN upon completion of the Proposed Acquisition.
TSN looks forward to progressing the Proposed Acquisition to obtain 100% ownership of TSi India and thereby increase its exposure to the Indian ATM industry and financial technology sector.
(1) 1 AUD = 51.20 INR as at 18 October 2016
