GuestLogix Inc.
TSX : GXI

GuestLogix Inc.

December 02, 2014 15:17 ET

GuestLogix Announces Agreement to Acquire Dublin-based Travel Technology Firm OpenJaw Technologies Limited

Transaction Will Create First Pure-Play, End-to-End Ancillary Revenue & Retailing Platform for the Global Passenger Travel Industry

TORONTO, ONTARIO--(Marketwired - Dec. 2, 2014) -

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES OF AMERICA OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA.

Transaction Highlights

  • Acquisition of OpenJaw Technologies Limited for US$41.2 million plus certain adjustments
  • Highly strategic acquisition enhances GuestLogix' existing retail platform with best-in-breed web-based travel merchandising software used by global travel companies
  • Complementary technology platform broadens ancillary revenue-focused service offerings available to current and prospective customers
  • Extends reach within the travel industry across all touch points (home, transfer, airport, onboard, hotel and elsewhere in destination) and all major verticals (airline, rail, bus, ferry, hotel, loyalty, online travel agency and car rental)
  • Expands customer base to include premier Canadian brands such as Four Seasons Hotels & Resorts, Aeroplan, and AIR MILES / Loyalty One
  • Accelerates transformation of GuestLogix into a software-centric solutions provider focused on high margin, recurring revenue
  • GuestLogix' global presence is extended with offices in Dublin and Galway (Ireland), Madrid (Spain) and Kraków (Poland)
  • Increases pro forma revenue and adjusted EBITDA by 64% and 251%, respectively, for nine months ending September 30, 2014
  • Transaction expected to be immediately accretive on all key metrics including revenue, EBITDA and operating cash flow

GuestLogix Inc. (TSX:GXI) ("GuestLogix" or the "Company"), a leading global provider of ancillary-focused merchandising, payment and business intelligence technology to airlines and the passenger travel industry, today announced it has entered into a definitive agreement under which the Company will acquire Dublin-based travel retailing technology firm OpenJaw Technologies Limited ("OpenJaw") for a combination of cash and shares issued to the vendors for total transaction value of US$41.2 million (the "Transaction") plus performance considerations by way of Company securities and adjustments for OpenJaw's cash balance. The transaction value represents approximately 1.8 times OpenJaw's annualized revenue for the nine months ending September 30, 2014. The Transaction is expected to close on December 22, 2014, but in any event, no later than January 22, 2015.

"With industry experts forecasting ancillary revenue in the airline industry alone to grow by an additional $130 billion by the year 2020, we recognize that there is an insatiable need for a technology platform designed to unilaterally support ancillary revenue initiatives across a travel company's entire operation", said Brett Proud, President & CEO of GuestLogix. "The fusion of GuestLogix' talent and best-in-class technology with the exceptional counterparts that reside within OpenJaw, introduces the industry's first comprehensive ancillary revenue and retailing platform that will support all stages of the travel journey. This transaction puts us on an elevated growth trajectory and we are proud to announce this transaction as part of the Canadian technology sector."

OpenJaw will add more than 30 international travel brands to GuestLogix' customer base, including major Canadian travel brands Four Seasons Hotels & Resorts, Aeroplan, and AIR MILES in addition to British Airways, Avis Budget Group Europe, and voyages-SNCF.com. The OpenJaw t-Retail Platform provides advanced web-based merchandising solutions to travel companies that are intent on improving online retailing capabilities through booking engines and other travel-related channels. OpenJaw has long-term customer agreements in a wide variety of travel verticals including airlines, high-speed ferries, online travel agencies, loyalty programs, hotels and car rental companies.

GuestLogix provides advanced retail and payment technology solutions for travel operators used onboard aircraft or other modes of transportation through attendant-driven models as well as self-service retail models via inflight entertainment and connectivity solutions. The Company also provides its solutions in the off-board space through self-service kiosk systems, mobile solutions and via staff in airport lounges. GuestLogix has long-term customer agreements in multiple travel verticals, including airlines, rail operators, bus operators, catering companies and duty-free concessionaires.

The combination of GuestLogix and OpenJaw will create a comprehensive ancillary revenue and retailing platform supporting all travel verticals from the first point of interaction with the traveler throughout the entire customer travel life cycle. For the first time, by leveraging advanced business intelligence tools, travel companies will soon be able to view ancillary revenue performance across their entire operation within a single technology platform - improving the take-up rates for product and service provisioning. In the future, by supporting all verticals and all touch points, travel brands will have access to a central technology provider to expand their retail programs across their entire organization.

"Like GuestLogix, OpenJaw's core mission is to enable our customers to become better, more profitable retailers," said Kieron Branagan, CEO of OpenJaw Technologies. "The OpenJaw t-Retail Platform has transformed the way travel products are merchandised online, and it is used by some of the world's leading travel brands to further innovate and drive business success. The OpenJaw team has the exciting opportunity to expand our ability to increase retailing performance within all travel verticals as we become an integrated part of GuestLogix."

Transaction Financing

Bought Deal Public Offering of Securities

In order to partially finance the cash consideration for the Transaction, GuestLogix has entered into an agreement with National Bank Financial Inc. as lead underwriter pursuant to which it, along with a syndicate to be formed, has agreed to purchase on a bought deal basis 20,000,000 subscription receipts (the "Subscription Receipts") at a price of $0.95 per Subscription Receipt and $20,000,000 aggregate principal amount of 7.00% extendible convertible unsecured subordinated debentures (the "Debentures") at a price of $1,000 per Debenture, for aggregate gross proceeds of $39,000,000.

Private Placement of Subscription Receipts

Contemporaneously with the public offering, GuestLogix has entered into agreements with certain subscribers to complete a concurrent private placement (the "Concurrent Private Placement") of 10,479,000 subscription receipts of the Company, having the same terms as the Subscription Receipts, at a price of $0.95 per subscription receipt, for additional aggregate gross proceeds of approximately $9,955,050.

Share Consideration

Certain OpenJaw shareholders have elected to receive, as partial consideration, an aggregate of $9,300,000 in common shares of GuestLogix, for pro forma aggregate ownership in GuestLogix of approximately 7%. Pursuant to the Transaction agreement, GuestLogix will issue approximately 9,789,474 of its common shares to the vendors on a private placement basis in partial satisfaction of the purchase price for the Transaction. The common shares issued as consideration will be issued at a deemed price of $0.95 per share, the same price as in the offering of Subscription Receipts.

GuestLogix' Advisors

National Bank Financial Inc. is acting as exclusive financial advisor to GuestLogix on the Transaction. GuestLogix' legal advisors are Mason Hayes & Curran and Wildeboer Dellelce LLP.

OpenJaw's Advisors

Mooreland Partners is acting as exclusive financial advisor to OpenJaw Technologies Ltd. on the Transaction. OpenJaw's legal advisors are LK Shields.

Conference Call

The Company's President & CEO, Brett Proud will host a conference call to discuss the Transaction.

Details of the call are as follows:

Date: December 2, 2014
Time: 4:30 pm EST
Telephone: 1.888.390.3967

Availability of Documents

Copies of related documents, such as the preliminary short form prospectus, underwriting agreement, subscription agreements and the share purchase agreement with OpenJaw will be available on SEDAR (www.sedar.com) as part of the public filings of GuestLogix.

About GuestLogix

GuestLogix Inc. (TSX:GXI)(OTC:GUESF), is a leading global provider of ancillary-focused merchandising, payment and business intelligence technology to airlines and the passenger travel industry, both onboard and off board. Bringing over a decade of expertise as the industry's most trusted onboard transaction processing partner to airlines, rail operators, and elsewhere in the passenger travel industry, GuestLogix powers the industry's growing reliance on ancillary revenue generation. Both direct to operators as well as through partnerships with global leaders in catering, duty-free, inflight entertainment, and self-service retail experts, the Company provides the payment services touching over 1 billion travelling consumers each year. GuestLogix' global headquarters and centre for product innovation is located in Toronto, with regional head offices located in Dallas, London, and Hong Kong. More information is available at www.guestlogix.com.

About OpenJaw

OpenJaw Technologies Limited is a leading online technology partner of the world's biggest travel brands. Guided by the OpenJaw four principles of t-Retailing, and leveraging the power of the dynamic travel retailing platform, the t-Retail Platform, OpenJaw is dedicated to helping airlines, and other large travel companies, to become travel retailing innovators. The OpenJaw customer portfolio includes: S7 Airlines, British Airways, TravelSky, Aeroplan, AIRMILES, Four Seasons Hotels & Resorts, voyages-SNCF.com, and Viajes El Corte Ingles. Founded in 2002, OpenJaw is headquartered in Dublin (Ireland), and has offices in Galway (Ireland), Madrid (Spain), Kraków (Poland) and Hong Kong. More information is available at www.openjawtech.com.

Additional Information

This press release is not intended to form the basis of any investment decision. It does not constitute an offer or invitation for the sale or purchase of any securities, businesses, and/or assets or any recommendation or commitment by GuestLogix Inc. or any other person and neither this press release, nor its contents nor any other written or oral information made available in connection with the Transaction shall form the basis of any contract. This press release has been prepared without reference to your particular investment objectives, financial situation, taxation position, and particular needs.

If you have any doubt regarding these matters, you should consult your financial or other advisers.

This press release does not purport to be comprehensive or to contain all the information that a recipient may need in order to evaluate the Transaction. No representation or warranty, express or implied, is given and, so far as is permitted by law and no responsibility or liability is accepted by any person, with respect to the accuracy or completeness of the press release or its contents or any oral or written communication in connection with the Transaction. In particular, but without limitation, no representation or warranty is given as to the achievement or reasonableness of, and no reliance should be placed on, any projections, targets, estimates or forecasts contained in this press release. By publishing this press release, GuestLogix does not undertake any obligation to provide any additional information or to update this press release or any additional information or to correct any inaccuracies which may become apparent, except as required by law.

Forward-Looking Statements

This news release includes certain forward-looking statements that are based upon current expectations, which involve risks and uncertainties associated with GuestLogix' business and the environment in which the business operates. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking, including those identified by the expressions "anticipate", "believe", "plan", "estimate", "expect", "intend", "accelerates transformation", "immediately accretive", "elevated growth trajectory' and similar expressions to the extent they relate to the Company or its management. Forward-looking statements include statements, without limitation, with respect to: the use of proceeds of the financing with respect to the Transaction, expected financial performance, OpenJaw's business model and GuestLogix' business model and business post-Transaction, the expected closing date of the Transaction and the anticipated benefits of the Transaction. ( The forward-looking statements are not historical facts, but reflect GuestLogix' current expectations regarding future results or events, including expectations and assumptions concerning availability of capital resources, strength of market conditions, customer demand, satisfaction of all closing conditions of the Transaction and the benefits of the Transaction for GuestLogix from a margin and accretion perspective (each of which may be impacted by the realization and timing of any potential synergies and the operating performance of OpenJaw and GuestLogix).

Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks related to: possible failure to realize the anticipated benefits of the Transaction, higher than anticipated costs or longer than anticipated time to integrate OpenJaw's business, the possible failure to achieve the full amount of anticipated cost synergies, the failure to close the Transaction, increased indebtedness, transitional risk, potential undisclosed costs or liabilities associated with the Transaction, the fact that historical and pro forma combined financial information may not be representative of GuestLogix' results post-Transaction, the absence of a financing condition in the share purchase agreement with OpenJaw, the reliance on information provided by OpenJaw and the dilutive effect on the holders of Common Shares.

To the extent any forward-looking statements in this press release constitutes future-oriented financial information or financial outlooks within the meaning of securities laws, such information is being provided to demonstrate the potential benefits of the financings and the Transaction and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are, without limitation, based on the assumptions and subject to the risks set out above.

Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. All subsequent oral or written forward-looking statements attributable to GuestLogix or any of its directors, officers or employees, or any persons acting on their behalf are expressly qualified in their entirety by the cautionary statement above. GuestLogix assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements expect as required by applicable laws.

THIS NEWS RELEASE IS NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES AND IS NOT AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF GUESTLOGIX, NOR SHALL IT FORM THE BASIS OF, OR BE RELIED UPON IN CONNECTION WITH ANY CONTRACT FOR PURCHASE OR SUBSCRIPTION. THE SUBSCRIPTION RECEIPTS AND DEBENTURES OF GUESTLOGIX WILL ONLY BE OFFERED IN THE PROVINCES OF CANADA, OTHER THAN QUEBEC, BY MEANS OF THE PROSPECTUS REFERRED TO ABOVE. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE US SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THESE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION THEREFROM.

NON-IFRS MEASURES

This press release refers to financial measures that are not recognized under International Financial Reporting Standards (IFRS). While GuestLogix and OpenJaw and certain other issuers measure and evaluate the performance of their respective consolidated operations and business segments with reference to non-IFRS measures, non-IFRS measures do not have any standardized meaning under IFRS and therefore are unlikely to be comparable to similar measures presented by other issuers. GuestLogix believes these measures are useful supplemental information that may assist investors in assessing their investment in the Subscription Receipts and Debentures. Adjusted EBITDA is a non-IFRS measures used in this press release. Please refer to the short form prospectus to be filed in all provinces of Canada other than Quebec for a reconciliation of non-IFRS measures.

© 2014 GuestLogix. All Rights Reserved. ®OnTouch is a trademark of GuestLogix Inc. and is registered in the United States and may be pending or registered in other countries. All other trademarks and trade names are the property of their respective owners.

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