Shareholders' meeting to approve the transactions, and proposed share consolidation and name change
TORONTO, ONTARIO--(Marketwired - Sept. 17, 2013) - Phonetime Inc. (the "Company") (TSX:PHD) is very pleased to announce that it has signed an asset purchase agreement for the acquisition by the Company of the software technology assets and operations of AGK Consulting, Inc. ("AGK"), a Florida-based company, which owns the software which the Company has been licensing and using since 2007 to operate its business. Management of the Company believes that the Company is now at a stage where it is important that it acquire and own this software to provide it control of the distribution of this software and technology into the market place.
The Company is also pleased to announce that it has signed an asset purchase agreement for the acquisition by the Company of the U.S. retail telecommunications business of Netel, Inc. ("Netel") a Florida-based company, which operates under the brand "Tel3". Management believes that the acquisition of Netel's business will provide the Company with various telecommunications platforms that, when combined with marketing plans, will allow the Company grow its telecommunications retail presence.
Each of the transactions is expected to close by October 31, 2013, subject to regulatory approval and approval of the shareholders of the Company and of each of AGK and Netel.
The Company's Chairman and CEO, Gary Clifford, commented, "We have worked hard over the last three years to build a strong core business under the Phonetime brand; it is now time to expand our business vision and to make Phonetime a brand within our expanding organization. We are very pleased that we will finally obtain ownership of the software and technology which is the heart and brains of our Phonetime business. We are also excited to be entering back in to the retail communications markets, Phonetime has a long history in this business, when combined with the Tel3 brand and platforms we expect that we will be able to make great things happen.
"Since taking over the business in 2010, our focus has been to put the business both operationally and financially on solid ground. This has been achieved. It is now time to leverage our strengths to bring the Company to the next level. Adopting a new identity that represents our vision of the future is part of that process. In addition to the purchases that we have made, we have also embarked upon two internal initiatives, the first being the launch of our Communications platform thru the brand "Route Dynamix" and the launch of our wireless initiative thru the brand "GoLifeTel".
Highlights of the transactions underlying the AGK Agreement and the Netel Agreement (the "Transactions") and certain related transactions include:
Shareholders' Meeting and Approvals
The Company has scheduled an annual general and special meeting for October 24, 2013 (the "Meeting"), notice of which was filed on SEDAR on September 13, 2013. At the Meeting, the Company will attend to customary annual general meeting matters, including receiving the financials for the most recently completed year end, appointing the Company's auditor and approving such auditor's remuneration and appointing directors.
Approval of Consolidation & Name Change
In addition to the annual general meeting matters, the Company also intends to seek shareholder approval for the Consolidation and Name Change. The Consolidation and Name Change are subject to shareholder approval and acceptance of The Toronto Stock Exchange (the "TSX").
Approval of the Transactions
At the Meeting, the Company will also seek shareholder approval for the Transactions.
Each of the Transactions constitutes a "related party transaction" as that term is defined under Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Therefore, the Company must obtain approval of the majority of the minority of its shareholders in accordance with the minority shareholder approval requirements of MI 61-101. Similarly, the TSX's rules will require that the Company obtain "disinterested shareholder" approval in order that the Transactions be accepted by the TSX.
The details of the Transactions, the Consolidation and Name Change, and other aspects of the Meeting, including the background to the Transactions and disclosure required by MI 61-101 and National Instrument 51-102 Continuous Disclosure Obligations ("NI 51-102") are included in the Company's information circular for the Meeting, which will be delivered to shareholders and filed on SEDAR (the "Information Circular").
Netel, Inc. (www.tel3.com) is US based retail telecommunications operator with $6 million of annual turnover, it was established in 1994, and at its peak the business had annual revenue over $20 million. For the last number of years the owners have followed a milking strategy. Phonetime plan to utilize Tel3's platform and to invigorate the brand with marketing injections as it re-enters the higher margin retail telecommunications market after a three year absence. Phonetime has agreed to issue 20 million shares at $0.10 per share to complete the purchase. Phonetime has obtained an independent appraisal of the value of Tel3 and the purchase process has been led by the independent directors. The purchase is subject to majority of the minority/disinterested shareholder approval and the approval of the TSX.
AGK Consulting, Inc. owns the technology and platform that Phonetime operate its business on a day to day basis. Phonetime's management and independent directors believe that it is essential that this software and related know-how be owned by Phonetime. Phonetime have agreed to acquire the software and related hardware from AGK in exchange for 20 million shares at $0.10 per share. Phonetime has obtained an independent appraisal of the value of AGK's software and technology and the purchase process has been led by the independent directors. The purchase is subject to majority of the minority/disinterested shareholder approval and the approval of the TSX.
Phonetime is a leading provider of international and domestic switched voice services to the world's telecommunication operators and voice service providers. Phonetime's customers and suppliers include, fixed line operators, mobile operators, retail and VoIP service providers, who buy and sell voice and IP telecommunications services. Phonetime has traders in Europe, Asia and the Americas using its proprietary trading platform with embedded intelligence, which includes profitability benchmarking, call routing, credit management, network quality visibility and loss prevention. As voice technology evolves Phonetime has commoditized its trading philosophy and along with its platform is positioned to emerge as a leading clearing house. Phonetime is a public company and its common shares are listed on the TSX.
Caution Regarding Forward Looking Information:
This press release contains forward-looking statements, which may be identified by words like "expects", "anticipates", "plans", "intends", "indicates" or similar expressions. These statements are not a guarantee of future performance and are inherently subject to risks and uncertainties. Phonetime's actual results could differ materially from those currently anticipated due to a number of factors set forth in reports and other documents filed by the Company with Canadian securities regulatory authorities from time to time. See www.sedar.com which contains all securities files.