Cyberplex Inc.

TSX : CX


Cyberplex Inc.

February 06, 2012 07:30 ET

Tsavo Media Update

TORONTO, ONTARIO--(Marketwire - Feb. 6, 2012) - Cyberplex Inc. (TSX:CX), a leader in online publishing and customer acquisition strategies today provided an update on the status of its indirect subsidiary, Orion Foundry (Canada) Inc. ("Tsavo Media").

The Company reported today that Tsavo Media has been engaged in discussions with Yahoo! to address concerns regarding the quality of traffic provided to the Yahoo! advertising base, and Tsavo Media's reliance on Yahoo!'s traffic quality reporting system. Tsavo Media has now been informed that it will be required to pay to Yahoo! approximately $4.8 million over a reasonable time period currently being discussed, notwithstanding prior information that indicated good quality traffic at that time. This amount may be partially offset by achieving certain performance incentives and anticipated improvements in average revenues per click, but the Company noted that there can be no assurance as to how much, if any, of this payment to Yahoo! would be offset through these incentives and improvements.

The Company noted that Yahoo! provides bi-weekly quality reports to Tsavo Media, which are extremely important to Tsavo Media in the management of its systems, analysis, forecasting and ultimately its day-to-day business decisions. Yahoo! recently communicated to Tsavo Media that notwithstanding the good quality score reports that had been provided throughout most of 2011, Yahoo! would retroactively charge Tsavo for what Yahoo! is now saying was actually low quality traffic, ranging back over many months during 2011. While the Company and Yahoo! remain in discussions on this issue, the Company now expects that Yahoo! will enforce its decision to charge back this amount citing its right to do so pursuant to the terms of Tsavo Media's agreement with Yahoo!.

"We are very frustrated by the timing of these events after spending almost one year rebuilding the Tsavo organization while negotiating a settlement with American Capital", said Geoffrey Rotstein, CEO of Cyberplex. "These events are disappointing given all of the hard work the Tsavo employees have invested to rebuild the organization and because they continue to take away and distract from all of the other positive developments and momentum being created within both Tsavo and the other divisions of Cyberplex."

Cyberplex also announced today that its President, Ted Hastings, has provided his resignation. "We are disappointed that things could not have worked out differently with Tsavo, but we recognize the effort Ted has devoted to Tsavo over the past few years", said Rotstein. "The remaining executive team at Tsavo understands the challenges that lie ahead and is properly focused on executing on its recovery plan."

A Special Committee of the Board of Directors of Cyberplex has been appointed to review the status of Tsavo Media and strategic alternatives available to create shareholder value out of that division, which is currently heavily encumbered by debt under Tsavo Media's credit facility with American Capital. The Committee will also be leading discussions with American Capital, to review the outlook for Tsavo Media relative to obligations under the credit facility.

American Capital has advised that Miles Arnone, nominee of American Capital to the Cyberplex Board, will again resign from his position as director. The Company expects that American Capital will reserve its rights to once again nominate a director to the Board of Cyberplex should the outcome of discussions warrant a role for an American Capital representative on the Cyberplex board.

About Cyberplex

Cyberplex Inc. (www.cyberplex.com) is a North American leader in online publishing and customer acquisition strategies. The Company, through its subsidiaries, connects advertisers to their most relevant online customers and prospects. Cyberplex delivers targeted, high quality results through online, mobile and social initiatives that improve advertiser ROI, monetize the value of online properties, and build loyal audiences.

Forward-Looking Statements

This news release may contain forward-looking statements that are based on management's current expectations and are subject to known and unknown uncertainties and risks, which could cause actual results to differ materially from those contemplated or implied by such forward-looking statements. Cyberplex is under no obligation to update any forward-looking statements contained herein should material facts change due to new information, future events or otherwise.

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