VersaPay Corporation and Great Hill Partners , a leading growth-oriented private equity firm, are pleased to announce that the Company and an affiliate of Great Hill have entered into a definitive arrangement agreement (the “Arrangement Agreement”) whereby Great Hill will indirectly acquire all of the issued and outstanding common shares of the Company (“VersaPay Shares”) by way of a statutory plan of arrangement under the Canada Business Corporations Act (the “Transaction”).
Under the terms of the Arrangement Agreement, each VersaPay shareholder (the “VersaPay Shareholders”) will receive cash consideration of C$2.70 for each VersaPay Share held (the “Consideration”), valuing VersaPay’s total equity at approximately C$126 million on a fully diluted basis. The Consideration represents a 47.5% premium to the closing price of the VersaPay Shares on the TSX Venture Exchange (the “TSXV”) on December 12, 2019 and a 64.5% premium to the volume weighted average price (“VWAP”) of the VersaPay Shares over the last 30 trading days.
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Benefits to VersaPay Shareholders
- Immediate and significant premium of approximately 47.5% to the closing price of the VersaPay Shares on December 12, 2019, and approximately 64.5% based on the 30-day VWAP.
- All cash offer that is not subject to a financing condition.
“We are very pleased to be able to recommend this transaction to our shareholders, employees and customers,” commented Art Mesher, Chairman of the Company, “With their deep knowledge of our industry and focus on supporting growth companies, Great Hill is uniquely positioned to understand our business and its long term potential, and help the Company to achieve that potential”.
“Great Hill is excited to partner with the VersaPay team and provide the capital to execute on their growth strategies” stated Matt Vettel, Managing Partner at Great Hill Partners. Craig O’Neill, CEO of the Company added, “I’d like to thank our employees who have worked so hard to achieve the growth and success we’ve experienced to date, our customers who have put their trust in us, and our shareholders who have supported us as a public company. We’re equally excited about our future working alongside Great Hill.”
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Independent Committee and Board of Directors Recommendations
An independent committee of VersaPay’s Board of Directors (the “Committee”) comprised of Arthur Mesher, Sheldon Pollack and David Dobson was constituted to consider the Transaction. Capital Canada Limited has provided a fairness opinion to the Committee (the “Fairness Opinion”) stating that in its opinion, and based upon and subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be received by the VersaPay Shareholders pursuant to the Transaction is fair, from a financial point of view, to the VersaPay Shareholders.
The Board of Directors, after receiving financial and legal advice, and following receipt of the Fairness Opinion and the unanimous recommendation of the Committee, has unanimously determined that the Transaction is in the best interests of VersaPay and is unanimously recommending that VersaPay Shareholders vote in favour of the Transaction.
In addition, directors and senior officers of VersaPay, who as of the date hereof collectively hold approximately 3.7% of the VersaPay Shares, have entered into agreements to support the Transaction and vote their VersaPay Shares in favour of the Transaction.
Transaction Conditions and Timing
The Transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act and will require the approval of 66 2/3% of the votes cast by VersaPay Shareholders at a special meeting of VersaPay shareholders to be called to approve the Transaction.
The completion of the Transaction will also be subject to obtaining required court and other approvals and satisfaction of closing conditions customary for a transaction of this nature. The Arrangement Agreement includes customary deal-protection provisions. VersaPay is subject to non-solicitation provisions and in certain circumstances, the Board of Directors may terminate the Arrangement Agreement in favour of an unsolicited superior proposal, subject to the payment of a termination fee of C$5.67 million and subject to a right of Great Hill to match such superior proposal. The Arrangement Agreement also provides for payment by Great Hill of a reverse termination fee of C$7.56 million if the Arrangement Agreement is terminated in certain specified circumstances, including if Great Hill does not satisfy its obligation to provide sufficient funds to complete the Transaction.
