Amendment of Veritape Deferred Consideration

RNS Number : 3325P

Eckoh PLC

18 August 2014

 

For Immediate Release

18 August 2014

Eckoh plc

("Eckoh" or "the Company")

Amendment of Veritape Limited Deferred Consideration

Eckoh, the global provider of secure payment products and customer service solutions, announces that it has reached agreement to amend the deferred consideration payable in respect of the acquisition of Veritape Limited ("Veritape") originally announced on 11 June 2013.

Since the acquisition of Veritape, all employees have been relocated to the Hemel Hempstead office and the business has been largely integrated within the Eckoh organisation. Over time it has been increasingly difficult to separate the activities of Eckoh and Veritape and it has become apparent that a full integration of the businesses in a shorter timeframe would be beneficial.

Under the original share purchase agreement, the deferred consideration was based on the financial performance of Veritape resulting largely from the sales of their own product lines. It has been determined that it would be in the best interests of the Company to amend this agreement such that the performance element of the deferred consideration payable to the Veritape management is based on achieving goals which are aligned to the strategy of the Group as a whole. 

Under the original agreement, deferred consideration of up to 16,618,785 ordinary shares of 0.25 pence in the capital of the Company ("Ordinary Shares") and cash of up to £1.7m could be paid to the former Veritape shareholders dependent on the achievement of certain profit before tax targets arising from the activity of Veritape Limited.

Under the terms of the new agreement there is no cash element and the deferred consideration of up to a maximum of 10,739,507 Ordinary Shares (£4.3m, based on the average share price for the 20 dealing days preceding 4 August 2014) will become payable as follows:

-     6,443,704 Ordinary Shares will be issued with immediate effect to the Veritape shareholders ("First Tranche");

-     Up to a further 1,073,951 Ordinary Shares can be earned dependent on the achievement of a group target of $3.4m of contracted revenues from activity in the USA in the year from 1 July 2014 to 30 June 2015; and

-     Up to a further 3,221,852 Ordinary Shares can be earned dependent on the achievement of a group revenue target of $7.4m from activity in the USA in the year from 1 July 2015 to 30 June 2016.

As well as aligning the Veritape management with the future strategy of the Group as a whole, the terms of the new agreement also recognise their performance since completion of the transaction in June 2013.

The shares being issued under the First Tranche will be subject to lock-in periods, with the two main beneficiaries of the deferred consideration, the two founder directors of Veritape, being subject to lock-in for a period of two years and the other beneficiaries being subject to a lock-in until September 2015.

An application will be made shortly to the London Stock Exchange for 6,443,704 new ordinary shares to be admitted to trading on AIM. It is expected that Admission will become effective on 20 August 2014. Following the admission of these shares, the number of Ordinary shares in issue will increase to 222,528,281.

Following the issue of 3,445,448 Ordinary Shares to a former Veritape shareholder James Heath, Mr Heath will have a total holding in the Company of 7,239,250 Ordinary Shares representing 3.25% of the entire issued share capital of the Company.

Nik Philpot, Chief Executive Officer of Eckoh, commented:

"Since acquiring Veritape Limited in June 2013, we have been delighted with the positive impact that the acquisition has had, and the success with which we have been able to integrate the Veritape team into the wider Eckoh group. It was therefore a logical step to take to alter the agreement to ensure that Veritape were incentivised to help the Company deliver on its key strategic goals.

Veritape's CallGuard solution, which was recently awarded a patent, is a key part of our US product portfolio that we believe will generate significant growth in that market over the next two years. The amended agreement will ensure that the Veritape team are rewarded in the event that our US activities are as successful as we anticipate."

For more information, please contact:

Eckoh plc

Nik Philpot, Chief Executive Officer

Adam Moloney, Group Finance Director

www.eckoh.com                                                                                                   Tel: [phone]

Buchanan

Jeremy Garcia, Gabriella Clinkard                                                                          Tel: [phone]

www.buchanan.uk.com

N+1 Singer

Shaun Dobson, Ben Wright                                                                                   Tel: [phone]

About Eckoh plc

Eckoh plc (AIM: ECK) is the UK's leading provider of multi-channel customer service and secure payment solutions. We are a PCI DSS Level One accredited Service Provider, currently processing over £300 million in card payments annually.

Eckoh's solutions enable payments, transactions and enquiries to be processed without the caller needing to talk to a contact centre agent. This significantly reduces our clients' costs, whilst freeing up their agents to deal with more complex enquiries. Eckoh is the largest provider of such hosted services in the UK.

Our secure and resilient infrastructure has the scalability to handle  up to 6,000 calls simultaneously, which means that calls will always be answered no matter how unpredictable the circumstances.

For more information, visit: www.eckoh.com

 

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