Sylogist Ltd.
TSX VENTURE : SYZ

Sylogist Ltd.

June 26, 2014 15:36 ET

Sylogist to Acquire Serenic Operating Companies

CALGARY, ALBERTA--(Marketwired - June 26, 2014) -

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Sylogist Ltd. (TSX VENTURE:SYZ) ("Sylogist") is pleased to announce that it has entered into a definitive agreement (the "Agreement") pursuant to which Sylogist will acquire all the outstanding shares of Serenic Canada Inc., Serenic Software, Inc. and Serenic Software (EMEA) Limited (collectively the "SOCs"), each a wholly-owned subsidiary of Serenic Corporation ("Serenic"), the companies under which Serenic conducts virtually all of its business today and which include Serenic's existing proprietary enterprise application software, all existing customer relationships, customer contracts, Microsoft and other third party agreements as well as its tax pools (the "Transaction").

Pursuant to the Agreement, Sylogist will pay approximately $8.0 million (CDN) cash consideration and assume Serenic's net working capital liability of approximately $3.8 million (CDN) for 100% of the shares of the SOCs, subject to closing adjustments. The majority of the net working capital liability relates to deferred revenue. Serenic's current cash of approximately $3.0 million will be retained by Serenic. Sylogist is acquiring all rights to the Serenic brand.

Serenic has formed a new operating division referred to as "Cloudco", which will retain the SOC's existing intellectual property associated with Serenic's cloud technology. Cloudco technology enables software applications based on Microsoft's Dynamics NAV ERP and CRM platforms to be optimized for use on Microsoft's new cloud technology platform. Sylogist will grant a royalty bearing OEM license involving certain of the SOC's products to Cloudco. Cloudco will re-brand and market these solutions to new customers segments that the SOCs have not historically pursued. The parties intend to work non-competitively to pursue new volume markets for mutual benefit.

"The addition of the Serenic Operating Companies strengthens Sylogist's offerings to the public sector and extends our reach to the non-governmental (NGO) and non-profit (NFP) markets. The SOCs have customers worldwide, with the majority headquartered in the United States and Serenic Navigator products for public sector, NGO and NFP clients are well recognized. One of the SOCs is the primary provider of payroll and human resources software, under license to Microsoft, for organizations that use Dynamics NAV ERP products in North American and certain international markets. Much of Serenic's intellectual property leverages Dynamics NAV, Microsoft's largest ERP platform. This acquisition is both financial and strategic for Sylogist, expanding our operations worldwide. The SOCs serve over 1,500 organizations, generating annual revenues of $12M in fiscal 2013. Through its significant recurring revenue contracts, technology, tax pools and access to the Microsoft Dynamics ecosystem, we foresee Serenic providing Sylogist with growth and a material increase in financial performance." stated Jim Wilson, Sylogist's President and CEO.

The Transaction is anticipated to close on July 25th, 2014. Closing of the Transaction is subject to, among other conditions, the approval of the Serenic shareholders, the receipt of all necessary regulatory and stock exchange approvals and satisfaction of certain other closing conditions which are customary in transactions of this nature.

The Serenic shareholder meeting, wherein shareholders will be asked to vote in support of the Transaction, is scheduled for July 22, 2014, following the mailing of an information circular to its shareholders describing the Transaction. The Agreement provides customary non-solicitation provisions and Serenic has agreed to pay Sylogist and Sylogist has agreed to pay Serenic, a termination fee in certain circumstances if the Transaction is not completed.

The directors of Sylogist and Serenic have unanimously approved the Transaction. Principal shareholders of Serenic, collectively representing in aggregate 41.6% of the issued and outstanding shares of Serenic, have entered into support agreements with Sylogist in which they have agreed to vote their shares of Serenic in favour of the Transaction.

Details of the Transaction are described in the Purchase and Sale Agreement which will be made available on SEDAR.

About Sylogist

Sylogist is a technology innovation company which, through strategic acquisitions, investments and operations management, provides enterprise application software to public and private sector customers.

The Company's stock is traded on the TSX Venture Exchange under the symbol SYZ. Information about Sylogist can be found on SEDAR and at http://www.sylogist.com.

About Serenic Corporation

Serenic is an international software company that conducts its operations through three active wholly owned subsidiaries: Serenic Software, Inc. ("SSI"), Serenic Canada Inc. ("SCI") and Serenic Software (EMEA) Limited ("SSE").

SSI is a Microsoft Industry Solutions Vendor ("ISV") headquartered in Lakewood (Denver), Colorado, U.S.A. and which has sales and service employees located in many states of the USA and in Africa. SSI develops and sells a full suite of products focused on fund accounting and operational applications for the not‐for‐profit ("NFP") and public sector (government and education) markets. Its principal product "Serenic Navigator" has been sold to and implemented by more than 500 clients in multiple countries and languages.

Serenic Canada Inc. ("SCI") has been the exclusively appointed developer and marketer of payroll and human capital management software applications ("HCM") for Dynamics NAV software products sold within North America and Mexico. SCI is responsible for all tasks and functions necessary to provide payroll solutions for Dynamics NAV customers, including software development, product enhancements, marketing, distribution, sales, training and support.

SSE was incorporated in England, for the primary purpose of conducting business more efficiently with clients situated in Europe and Africa.

The Company's stock is traded on the TSX Venture Exchange under the symbol SER. Information about Serenic can be found on SEDAR and at http://www.serenic.com.

Forward-looking Statements

This news release contains forward-looking statements relating to the future operations and profitability of Sylogist or Serenic and other statements that are not historical facts. Forward-looking statements are often identified by terms such as "may," "should," "anticipate," "expects," "believe," "will," "intends," "plans" and similar expressions. Any statements that are contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. More particularly and without limitation, this press release contains forward-looking information concerning: the anticipated benefits of the Transaction to Serenic, its shareholders, and Sylogist, including anticipated synergies and potential financing sources; the holding of the shareholder meeting of Serenic; expected tax pools available to Sylogist, and; the closing of the Transaction. Such forward-looking information is provided for the purpose of providing information about management's current expectations and plans relating to the future. Investors are cautioned that reliance on such information may not be appropriate for other purposes, such as making investment decisions. In respect of the forward-looking information and statements concerning the anticipated benefits and completion of the proposed Transaction and the anticipated timing for completion of the Transaction, each of Sylogist and Serenic has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of Serenic to receive, in a timely manner, the necessary regulatory, shareholder, stock exchange and other third party approvals; the ability of each of Sylogist and Serenic to satisfy, in a timely manner, the other conditions to the closing of the Transaction; and expectations and assumptions concerning, among other things: interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour and services; the success of growth projects; future operating costs; that counterparties to material agreements will continue to perform in a timely manner; that there are no unforeseen events preventing the performance of contracts; and that there are no unforeseen material construction or other costs related to current growth projects or current operations. The anticipated dates provided may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary shareholder, regulatory, or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Transaction. Accordingly, readers should not place undue reliance on the forward-looking information contained in this press release.

Since forward-looking information addresses future events and conditions, such information by its very nature involves 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 the risks associated with the industries in which each of Sylogist and Serenic operates in general such as: costs and expenses; interest rate and exchange rate fluctuations; competition; failure to realize the anticipated benefits of the Transaction and to successfully integrate acquired companies and assets; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws. Risks and uncertainties inherent in the nature of the Transaction include the failure of Serenic to obtain necessary shareholder, regulatory, and other third party approvals, or to otherwise satisfy the conditions to the Transaction, in a timely manner, or at all. Failure to so obtain such approvals, or the failure of each of Sylogist and Serenic to otherwise satisfy the conditions to the Transaction, may result in the Transaction not being completed on the proposed terms, or at all.

Readers are cautioned that the foregoing list of factors is not exhaustive. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and neither Sylogist nor Serenic undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.

This joint news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.

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 release

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