LONDON (Alliance News) - Earthport PLC Monday said it has agreed a deal to reinforce its relationship with financial technology company and supplier ASPone Ltd, under which the cross-border payments service provider will buy a 45% stake in ASPone in four years' time, with the option to purchase of the entire business.
Earthport agreed the deal with Ekwienox Ltd, Mustafa Sina Hakman, Julian Kelly, and Patrick McGrath. McGrath is chief executive officer of ASPone.
In a statement, Earthport said the forward acquisition will be based on a minimum enterprise value of GBP6.0 million for all of ASPone, which will be reduced by an amount equal to any distributions from ASPone to its existing shareholders from its free cash flow over the next four years.
The maximum amount payable by Earthport for the 45% stake in ASPone will be GBP2.7 million. This will be reduced by an amount equal to any distributions from ASPone to its existing shareholders or debt holders from its free cash flow over the next four years as well as by 45% of ASPone's net debt at the time of acquisition of the stake. Earthport can accelerate the forward purchase of the minority stake at any time, subject to the minimum enterprise valuation of ASPone being increased to GBP12.0 million.
Earthport said it also has two call options over ASPone's equity. The first of these is over 10% of ASPone's equity at the same enterprise valuation as the minority stake, calculated as 10% of GBP6.0 million less net debt of ASPone in five years' time, expiring on the fifth anniversary of the agreement.
The second option, on the balance of ASPone's fully-diluted equity not owned by Earthport, is at a value equal to the higher of GBP6.0 million and five times ASPone's adjusted, trailing twelve month free cash flow. This option expires on the seventh anniversary of the agreement.
Earthport Chief Executive Hank Uberoi, the former co-chief operating officer of Goldman Sachs' technology division, said the the forward purchase of the minority stake in ASPone provides Earthport with an "additional comfort" to deepen its customer-supplier relationship.
"Our reinforced partnership with ASPone will allow us to leverage their technology assets more extensively to better serve our customers and to achieve scale at pace. In addition, we believe that the financial terms secured provide a prudent level of protection whilst also reflecting our belief in the strength of the ASPone team and offering," Uberoi said in a statement.
"We have had a strong working relationship with ASPone for some time; going forward, we look forward to further solidifying this relationship and working more closely together to service our global clients and, in some cases, accelerate their ability to adopt our solution," Uberoi added.
For the financial year ended March 31 2013, ASPone had a turnover of GBP5.2 million, a pretax loss of GBP800,000, and net liabilities of GBP2.6 million.
Earthport said that ASPone's revenues and costs won't have any direct impact on its own, other than as a strategic supplier which will continue to be negotiated on a commercial basis.
Earthport shares were Monday up 1.7% at 44.77 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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