Nuri Telecom Company Limited

Nuri Telecom Company Limited

January 17, 2017 11:12 ET

Nuri Telecom Company Limited Commences All Cash Offer for all of the Common Shares of Apivio Systems Inc.

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan. 17, 2017) -

A graph is available at the following address: http://media3.marketwire.com/docs/1082974e_Map.pdf

Nuri Telecom Company Limited ("Nuri") announced today that its wholly-owned subsidiary, 1101324 B.C. Ltd. (the "Offeror"), has commenced an all cash offer (the "Offer") to the shareholders ("Shareholders") of Apivio Systems Inc. ("Apivio" ) to acquire all of the issued and outstanding common shares ("Common Shares") of Apivio.

A Significant Premium and Certainty of Liquidity

The Offeror is offering CDN$0.40 in cash for each Common Share which represents a 51% premium based on the closing price of the Common Shares on the TSX Venture Exchange ("TSXV") on January 16, 2017 (the last trading day prior to the public announcement by Nuri of its proposal to the Shareholders to acquire Apivio). The Offer also represents a premium of 49% to the volume weighted average trading price of the Common Shares on the TSXV over the 30 trading days ended on January 16, 2017.

Chairman and Chief Executive Officer of Nuri, Song Man Cho expressed, "The Offer represents a compelling opportunity for Shareholders to realize certain value for their Common Shares at an attractive premium. We urge Shareholders to consider the Offer and tender their Common Shares."

Mr. Cho explained, "Nuri is a publicly traded company listed on the KOSDAQ in Korea with a market capitalization of approximately CDN $127.8 million as at January 16, 2017. The Offer is not subject to any financing conditions and Nuri will fund the Offer from available cash resources."

Benefits of the Offer

Nuri encourages Shareholders to consider the following factors, among others, when making the decision to accept the Offer.

  • Significant Premium to Market Price. The Offer represents a significant premium of over 51% based on the closing price of the Common Shares on the TSXV on January 16, 2017. The Offer also represents a significant premium of 49% to the volume weighted average trading price of the Common Shares on the TSXV over the 30 trading days ended on January 16, 2017.

  • Fair Value for Apivio. The Offer price of $0.40 in cash for each Common Share represents a premium value that fairly reflects the composition and performance of Apivio's portfolio of assets. The Offer price indicates an enterprise value of approximately $22 million for Apivio, which implies a price-earnings ratio of approximately 42x to Apivio's earnings per share of $ 0.01, as well as approximately 13x to Apivio's Adjusted EBITDA, based on Apivio's most recent publicly filed financial information.

  • Realize Significant Value. The all cash consideration provides Shareholders with the opportunity to realize significant and certain value for their Common Shares. The Offeror believes the immediate value is even more attractive when viewed against the risks inherent in any long term business plan of Apivio, particularly given its recent stock performance.

    As the chart above shows, the Apivio Board and management team have presided over a share price decline of approximately 39.08% over the one year prior to January 16, 2017, representing a loss of approximately $8.98 million in equity value from its highest point on February 3,2016.

  • Liquidity. Shareholders currently have limited liquidity based on the trading history of the Common Shares. The aggregate total trading volume for the entire year ended on December 30, 2016 is only 14,538,337 Common Shares, representing less than 28% of the number of issued and outstanding Common Shares. The Offer provides 100% cash consideration at a significant premium for the Common Shares, giving Shareholders certainty of value and immediate liquidity, with the added benefit of the opportunity to sell their Common Shares free of broker commissions and fees for those who deposit their Common Shares directly with the Information Agent and Depositary.

  • Fully Funded Cash Offer. The Offer is not subject to a financing condition. The Offeror will fund the entire Offer from available cash resources.

  • Low Likelihood of a Competing Offer. The Offeror believes that Apivio is unlikely to receive a competing offer at a premium to the price being offered by the Offeror.

  • Avoid Uncertainty of Continued Investment in Apivio. Apivio faces significant challenges that represent a substantial risk for Shareholders going forward, including:

    • Apivio Dependent on Moimstone. Apivio's financial health is dependent on its wholly-owned Korean subsidiary, Moimstone, which represents approximately 95% of Apivio's overall revenues for the 2014 and 2015 fiscal years. Apivio's performance in North America, independent of Moimstone, has been flat, with its major sales to date consisting of a $2.6 million contract for the UT880 Monet series VoIP phone and a $0.2 million contract for the Wi-Fi Liberty series, Liberty L1 product in 2015. To put these numbers in perspective, Apivio spent roughly the equivalent amount in North America on research and development and marketing expenses.

    • Moimstone Faces Stagnating Market in Korea. While Apivio depends on Moimstone for the bulk of its revenues, Moimstone's own future growth prospects face significant headwinds and appear limited. Moimstone operates in the relatively mature market of Korea's VoIP telephony industry where it already enjoys a 95% market share. In this context, the Offeror and Nuri believe any further growth for Moimstone will necessarily involve significant market and execution risks.

    • Thin Market for High End Products. As a cornerstone of its business plans, Apivio's management team has devoted substantial resources to developing high-end products such as the UT880 Monet series VoIP phone for NEC America and the Wi-Fi Liberty series units for the North American market. However, the market for high-end products in the VoIP telephony market is relatively thin and can quickly saturate. The Offeror and Nuri believe there are significant risks to the high-end product line strategy currently being pursued by Apivo's management team.

  • Potential for Downward Impact to Common Share Price if Offer Not Accepted. The Offer represents a significant premium to the market price of the Common Shares prior to the public announcement by the Offeror of its Offer to the Shareholders to acquire Apivio. If the Offer is not successful, and no other offer is made for Apivio, the Offeror believes it is likely the Common Share price will decline significantly below the Offer price.

Lock-Up Agreements

The Offeror has also entered into lock-up agreements (the "Lock-Up Agreements") with various shareholders of Apivio (the "Locked-Up Shareholders"), including the founder and former CEO of Moimstone, and former board member of Apivio, C.W. Lee. The total number of Common Shares subject to the Lock-Up Agreements represent approximately 10.69% of the issued and outstanding Common Shares. Under the Lock-Up Agreements, each of the Locked-Up Shareholders has agreed, subject to certain exceptions, to accept the Offer by depositing the Common Shares presently owned or controlled by the Locked-Up Shareholder in accordance with the terms and conditions of the Offer.

Filing and Mailing of Offer and Takeover Bid Circular

Nuri has filed the Offer and take-over bid circular and related documents (collectively, the "Offer Documents") with the applicable Canadian securities regulatory authorities on SEDAR. The Offeror is also mailing the Offer Documents to Shareholders.

Full Details of the Offer are contained in the Offer Documents and Nuri encourages Shareholders to carefully review the Offer Documents and to consider the important information set out therein, including detailed instructions on how to tender their Common Shares to the Offer. Copies of the Offer Documents may be retrieved on the website for the Offer at www.ApivioOffer.com or under Apivio's profile at www.sedar.com. Shareholders may also obtain copies of the Offer Documents free of charge upon request made to the Offeror's Information Agent and Depositary, Laurel Hill Advisory Group at 1-877-452-7184 (North American Toll Free), or by email at assistance@laurelhill.com.

THE OFFER WILL BE OPEN FOR ACCEPTANCE UNTIL 11:59 P.M. (TORONTO TIME) ON MAY 2, 2017, UNLESS THE OFFER IS EXTENDED, ACCELERATED OR WITHDRAWN BY THE OFFEROR IN ACCORDANCE WITH ITS TERMS.

Shareholder Questions

If you have any questions regarding the Offer or require assistance with tendering your Common Shares, please call the Information Agent and Depositary for the Offer, Laurel Hill Advisory Group, toll free in North America at 1-877-452-7184 (+1-416-304-0211 outside North America), or by email at assistance@laurelhill.com.

About Nuri

Nuri is a provider of next generation communication technology for the Internet of Things ("IoT") and the Smart Grid industry. Nuri is a global leader in providing end-to-end advanced metering infrastructure solutions that save consumers money and help utilities to run a network infrastructure that's proven, reliable, future-proof and fully standardized. Nuri's core product offering is a communication solution for smart meters, AiMiR, which provides automatic meter readings of electricity, water, gas and other measurements and delivers gathered data through a variety of networks in real time. AiMiR helps consumers and utility companies manage their resource consumption by providing real time information, accommodating their resource distribution to optimum levels for both short term and long term infrastructure needs.

To date, Nuri has deployed its communication systems to over two million households and businesses in 19 countries worldwide, and that number continues to grow each day through large-scale deployments in commercial, industrial, and residential markets. With a growing list of global customers, Nuri is expanding its customer base throughout Asia, Europe and Africa. Recently, Nuri has won US$79 million Soria projects in Norway and US$12 million ECG projects in Ghana.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

This news release does not constitute an offer to buy or the solicitation of an offer to sell any of the securities of the Offeror, Nuri or Apivio.

NON-IFRS MEASURES

This news release makes reference to certain non-IFRS measures. These non-IFRS measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of operations from management's perspective. Accordingly, non-IFRS measures should never be considered in isolation nor as a substitute for analysis of financial information reported under IFRS. Specifically, this news release discloses Adjusted EBITDA, which is a non-IFRS measure used by Apivio. Apivio defines Adjusted EBITDA as net income (loss) before interest expense, taxes, depreciation, amortization, and stock compensation. Adjusted EBITDA is not necessarily comparable to similarly titled measures used by other companies. Adjusted EBITDA is not a measurement of operating performance or liquidity under IFRS and should not be considered as a substitute for earnings from operations, net income or cash generated by operating activities computed in accordance with IFRS. Companies may calculate Adjusted EBITDA differently than Apivio does, limiting its usefulness as a comparative measure.

Cautionary Statement

The information concerning Apivio contained in this news release has been taken from, or is based upon, publicly available information filed by Apivio with securities regulatory authorities in Canada prior to the date of this news release and other public sources. Neither Nuri nor the Offeror, nor any of the officers or directors of Nuri or the Offeror assume any responsibility for the accuracy or completeness of such Apivio information or any failure by Apvio to disclose events or facts that may have occurred, or which may affect the significance or accuracy of any such Apivio information, but which are unknown to Nuri or the Offeror. Nuri or the Offeror have no means of verifying the accuracy or completeness of any of the Apivio information contained in this news release or whether there has been a failure by Apivio to disclose events or facts that may have occurred or may affect the significance or accuracy of any such information.

This news release contains "forward-looking statements" or "forward-looking information" (collectively referred to herein as "forward-looking statements") within the meaning of applicable securities legislation. Such forward-looking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Nuri and the Offeror. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words "will", "plan", "intends", "may", "will", "could", "expects", "anticipates" and similar expressions. In particular, this news release contains forward-looking statements pertaining to: completion of the Offer; the resources Nuri will use to fund the Offer; the markets remaining volatile; limited liquidities impact on the price of Common Shares and the timing when a Shareholder can sell such Common Shares; the conditions of the Offer; a competing offer; and risk resulting from the Apivio Board and management team's strategy.

These forward-looking statements are based on assumptions made by and information currently available to Nuri and the Offeror. Although management of Nuri and the Offeror consider these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. By their very nature, forward-looking statements involve inherent risks and uncertainties and readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the beliefs, plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to: the ultimate outcome of any possible transaction between the Offeror and Apivio, including the possibility that Apivio will not accept a transaction with the Offeror or enter into discussions regarding a possible transaction; that the conditions of the Offer may not be satisfied or waived by the Offeror at the expiry of the Offer period; the ability to obtain regulatory approvals and meet other closing conditions to any possible transaction, including any necessary Shareholder approvals; potential adverse reactions or changes to business relationships resulting from the announcement; pendency or completion of the Offer transaction or any subsequent transaction; competitive responses to the announcement or completion of the Offer; uncertainties as to the impact of the completion of the Offer or any alternative or subsequent transaction on Nuri's earnings or cash flows; unexpected costs, liabilities, charges or expenses resulting from the proposed transaction; litigation relating to the proposed transaction; any changes in general economic and/or industry-specific conditions.

The forward-looking statements in this news release are made as of the date hereof and, except as required by applicable securities laws, Nuri and the Offeror disclaim any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Cautionary Statement Respecting Status of the Offer

Shareholders (and others) are able to obtain, at no charge, a copy of the Offer Documents from SEDAR at www.sedar.com and from our Information Agent and Depositary. This news release is for informational purposes only and does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any other solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for any security.

Contact Information

  • Information Agent and Depositary for the Offer
    Laurel Hill Advisory Group
    1-877-452-7184 (Toll free in North America)
    +1-416-304-0211 (Outside North America)
    assistance@laurelhill.com