DirectCash Payments Inc.
TSX : DCI

DirectCash Payments Inc.

November 01, 2013 15:31 ET

DirectCash Payments Inc. Completes Acquisition of Threshold Financial Technologies Inc. and Enters Into Canadian Vault Cash Rental Agreement

CALGARY, ALBERTA--(Marketwired - Nov. 1, 2013) -

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DirectCash Payments Inc. ("DirectCash" or the "Corporation") (TSX:DCI) is pleased to announce that it has today, successfully completed its previously announced acquisition of Threshold Financial Technologies Inc. ("Threshold") from Brink's Canada Limited (the "Acquisition") and entered into two Canadian vault cash rental agreements with a major Canadian financial institution.

"We are very excited to complete our acquisition of Threshold, bolstering our core ATM business in Canada and expanding into the complementary, highly strategic credit union and financial institution ATM outsourcing and payments processing space. DirectCash's entry into a Canadian vault cash rental agreement for our existing core ATM business in Canada will reduce debt improving our financial flexibility and enhance our options for managing capital and operating expenditures, while aligning our financial covenant calculations with those of our peers" said Jeffrey Smith, DirectCash's President and Chief Executive Officer.

Canadian Vault Cash Rental Agreements

At the same time as the acquisition of Threshold, DirectCash has entered into an unsecured $40 million vault cash rental agreement with a major Canadian financial institution ("Vault Cash Provider"). This agreement provides for the Corporation to rent cash from the Vault Cash Provider for use in the Threshold ATMs.

In addition, DirectCash and the Vault Cash Provider have executed a second unsecured vault cash rental agreement for up to $60 million for use in DirectCash's existing Canadian ATM business, Over the next 60 days DirectCash expects to migrate its existing full placement Canadian ATM fleet to utilize the cash made available under the vault cash rental agreement.

Under these vault cash rental agreements, the Vault Cash Provider has committed to providing DirectCash with vault cash in an amount up to $100 million to be used in its ATMs across Canada. The Corporation never has an ownership claim over the vault cash which is loaded into serviced ATMs by third party armoured car carriers. Ownership of the vault cash will remain with the Vault Cash Provider. The terms of the agreements provide DirectCash with sufficient operational control to ensure the Corporation's ongoing high standards of service reliability. Under the agreement, DirectCash will pay a fee to the Vault Cash Provider which is calculated using the total amount of vault cash in circulation at any given time and the number of notes supplied by the Vault Cash Provider from time to time.

DirectCash expects the vault cash rental agreements will improve operational flexibility and provide it with opportunities to better utilize its own cash. Historically, DirectCash has used its own cash or cash drawn from its revolving credit line to run its full placement Canadian ATM fleet. Once in place, the Vault Cash Agreements will allow DirectCash to partially repay outstanding indebtedness.

The fees to be paid by the Corporation under the vault cash rental agreements are lower than the costs currently incurred by the Corporation for its cash in circulation used to fill ATMs through its existing credit agreement therefore reducing expenses. This new arrangement does not have DirectCash holding the cash or allow it to have access to the cash, as the cash at all times remains the property of the Vault Cash Provider. The cash made available under this agreement is not debt, nor is the agreement considered a debt instrument.

Advisors and Counsel

BMO Capital Markets acted as sole financial advisor to DirectCash in regards to the acquisition of Threshold, and Burnet, Duckworth & Palmer LLP served as legal advisor.

About DirectCash

DirectCash is a Canadian public company traded on the Toronto stock exchange, with operations in Canada, the United Kingdom, Australia, New Zealand, and Mexico. With a full service payments offering, DirectCash has grown to be the largest branded ATM provider in Canada, the largest non-bank branded ATM provider in Australia1, and the second largest branded ATM provider in the United Kingdom2 operating in excess of 20,000 ATMs worldwide. In addition to the fleet of ATMs and associated services, DirectCash is a leading provider of branded non-financial institution debit terminals and prepaid card products in Canada and operates a full service transaction processing switch for Interac and other payment card network transactions in Canada.

Additional information about DirectCash, including DirectCash's Annual Information Form and other public filings is available on SEDAR (www.sedar.com) and on the DirectCash's website (www.directcash.net).

About Threshold

Threshold is a full service integrated solution provider of comprehensive and innovative payments processing and ATM managed services solutions. Threshold specializes in ATM network management and the provision of payments processing services to credit unions, financial institutions and major retailers across Canada. Threshold has two primary business segments, one that caters to credit unions and other financial institutions (the "CUFI Business") and a non-bank ATM business (the "Non-Bank ATM Business").

(1) Through its wholly owned, indirect subsidiary, DC Payments Australasia Pty Ltd
(2) Through its wholly owned, indirect subsidiary, DC Payments UK Limited

About the CUFI Business:

Threshold provides switch and transaction processing services and other managed services to credit unions and financial institutions across Canada. The end-to-end payment solutions provided by Threshold to the credit unions and financial institutions enables those credit unions and financial institutions to outsource their debit and ATM card processing and compete with services similar to those offered by larger banks. The CUFI Business services are broadly comprised of transaction switching services, card provisionjbrown@bdplaw.coming, payments processing, reporting and settlement, fraud management, ATM Cash Management, ATM Fleet Management and project-based consulting services.

About the Non-Bank ATM Business:

The Non-Bank ATM Business of Threshold consists of approximately 1,475 retail non- bank ATMs owned and operated under the "LaserCash" brand as well as ATMs managed on behalf of gaming and major retail clients in Canada.

Threshold entered the Canadian payments industry in 1998, and has proven itself as a center of excellence in delivering a wide array of best-in-class payments and ATM solutions. In addition to providing managed solutions, Threshold owns and operates a nationwide private label ATM network. Additionally, Threshold operates THE EXCHANGE® network in Canada, a shared surcharge-free ATM network comprised of over 200 financial institutions.

Forward-looking Statements

In the interest of providing DirectCash's shareholders and potential investors with information regarding DirectCash, including management's assessment of the future plans and operations of DirectCash, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In particular, this news release contains, without limitation, forward-looking statements pertaining to the following: expectations of management regarding the Acquisition and the vault cash rental agreements, the expected effects of the cash-flow associated with the Acquisition, potential synergies resulting from the Acquisition the finalization of the vault cash rental agreements.

With respect to forward-looking statements contained in this news release, DirectCash has made assumptions regarding, among other things: the ability of DirectCash to execute and realize on the anticipated benefits of the Acquisition and the vault cash rental agreements; results of operations; performance; business prospects and opportunities; DirectCash's ability to comply with the terms of the vault cash rental agreements in order to access the vault cash.

Although DirectCash believes that the expectations reflected in the forward looking statements contained in this news release, and the assumptions on which such forward- looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause DirectCash's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the following: that the terms of the vault cash rental agreements are complied with in order to provide DirectCash with access to the vault cash; incorrect assessment of the value of the Acquisition; failure to realize the anticipated benefits and synergies of the Acquisition and/or previous acquisitions; the general economic conditions in Canada, the U.S. and globally; and the other factors described under "Risk Factors" in DirectCash's most recently filed Annual Information Form available in Canada at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this news release speak only as of the date of this news release. Except as expressly required by applicable securities laws, DirectCash does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

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