SOURCE: Payment Data Systems, Inc.

May 09, 2005 09:47 ET

Payment Data Systems Announces Common Stock Purchase Rights Dividend

SAN ANTONIO, TX -- (MARKET WIRE) -- May 9, 2005 -- Payment Data Systems, Inc. (OTC BB: PYDS) an integrated electronic payments solutions provider, announced today that its Board of Directors has declared a dividend distribution of one common stock purchase right on each outstanding share of its common stock.

The action taken by the Board of Directors is designed to protect the long-term value of shareholders' and employees' investment in Payment Data Systems, Inc., to assure that all shareholders receive fair and equal treatment in the event of any proposed takeover and to guard against partial tender offers, squeeze-outs, open market accumulations and other coercive tactics to gain control of Payment Data Systems, Inc. without paying all shareholders a fair control premium. The Company is not aware of any current attempt to acquire control of Payment Data Systems, Inc.

Until the rights become exercisable, the rights will trade automatically with the common stock of Payment Data Systems, Inc. and separate rights certificates will not be issued. The rights will be exercisable only if a person or group acquires 15% or more of Payment Data Systems, Inc.'s common stock, whether through open market or private purchases or consummation of a tender or exchange offer, or announces an offer the consummation of which would result in such person or group owning 15% or more of Payment Data Systems, Inc.'s common stock. When the rights first become exercisable, each right will entitle the holder to purchase one share of common stock for $0.23, subject to adjustment. If Payment Data Systems, Inc. is involved in a merger or other business combination after a person or group has acquired 15% or more of Payment Data Systems, Inc.'s common stock, each right will entitle its holder to purchase, at the right's then-current exercise price, a number of the acquiring company's shares having a market value of twice the exercise price of each right. If a person or group acquires 15% or more of Payment Data Systems, Inc.'s common stock, each right will entitle its holder to purchase a number of additional shares of common stock having a market value of twice the exercise price of each right.

The rights are intended to enable all shareholders to realize the long-term value of their investment in Payment Data Systems, Inc. They will not prevent a takeover, but should encourage anyone seeking to acquire Payment Data Systems, Inc. to negotiate with the Board prior to attempting a takeover. The Board may redeem the rights for $.001 per right prior to the acquisition of 15% or more of our common stock by a single acquirer or group.

The rights were issued to shareholders of record on April 29, 2005 and will expire on April 29, 2009. The rights distribution is not taxable to shareholders.

About Payment Data Systems, Inc.

Payment Data Systems, Inc., is an Integrated Payments Solution Provider delivering comprehensive, cost-effective solutions to billers and retailers for the processing and management of electronic payments via the Internet, point of sale, or payments taken by Customer Service Representatives or an Interactive Voice Response (IVR).

Additional products available from PDS include services and products that can be implemented more quickly and less expensively than the alternative of adding multiple payments companies as these solutions offer a full range of payment processing capabilities. These service offerings include: one time and recurring ACH debits and credits, electronic lockbox and returned check services, Web pay acceptance of credit cards and checks, telephone pay to Customer Service Representatives for acceptance of credit cards and checks, Interactive Voice Response systems which completely automate the payment receiving process, and data warehousing that enable the storage and retrieval of all payment history from one location.

Payment Data is the owner of the electronic bill payment portal, has the ability to transmit electronic payments to thousands of national billers.

For additional information, visit

Contact: Michael Long, Investor Relations, Payment Data Systems, Inc. 210-249-4040.


Except for the historical information contained herein, the matters discussed in this release include certain forward-looking statements, which are intended to be covered by safe harbors. Those statements include, but may not be limited to, all statements regarding our and management's intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. Investors are cautioned that all forward-looking statements involve risks and uncertainties including, without limitation, the factors detailed from time to time in our filings with the Securities and Exchange Commission. One or more of these factors have affected, and in the future could affect, our businesses and financial results in the future and could cause actual results to differ materially from plans and projections. We believe that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to our management. We assume no obligation to update any forward-looking statements, except as required by law.

Contact Information

  • Contact:
    Michael Long
    Investor Relations
    Payment Data Systems, Inc.