Global BPO Services Corp Enters Into Agreement to Acquire Stream Holdings Corporation
28 Januar 2008 - 1:30PM
PR Newswire (US)
BOSTON, Jan. 28 /PRNewswire-FirstCall/ -- Global BPO Services Corp.
(AMEX:OOO.U) announced today that it has entered into a definitive
acquisition agreement to acquire 100% of the outstanding equity in
Stream Holdings Corporation ("Stream"), a leader in providing
global customer relationship management ("CRM") and other business
process outsourcing ("BPO") services to Fortune 100 companies. The
transaction values Stream at approximately $225.8 million. The
merger has been unanimously approved by Global BPO Services Corp.'s
Board of Directors and also has been approved by the Board of
Directors and stockholders of Stream. Global BPO Services Corp.
("GBPO") was created in 2007 as a special purpose acquisition
corporation with the objective to acquire a business process
outsourcing company. In October 2007, GBPO raised $250 million in
an initial public offering. Deutsche Bank Securities Inc. was the
sole-book runner and Robert W. Baird & Co. was the co-manager
on the IPO. GBPO conducted a diligent search of the market and
examined many potential candidates in the BPO services industry
since completing its initial offering. This search targeted
primarily CRM, transaction processing, information services,
document management and human resource outsourcing companies.
Stream provides CRM and other BPO services to leading technology,
communications and consumer electronics companies. Stream has over
16,000 employees with 32 service locations in 16 countries,
including the United States, Canada, Europe, North Africa, India
and Latin America. GBPO expects Stream to have preliminary
unaudited revenues of $483.8 million in the year ended December 31,
2007, as compared to $405.5 million in fiscal 2006. GBPO expects
Stream to have adjusted EBITDA of approximately $23.3 million
(preliminary and unaudited) for the fiscal year ended December 31,
2007 (see schedule below), as compared to adjusted EBITDA of $17.4
million for fiscal 2006 (see schedule below). For 2008, GBPO
projects that Stream should have revenues of between $525 and $540
million and adjusted EBITDA of between $33 million and $35 million.
Subject to the timing of the closing of the transaction, GBPO
believes that there are opportunities to enhance the operating
earnings potential of Stream over its existing business plan by at
least $15 million in 2009 through a combination of the following:
introducing new complementary services, establishing additional
offshore service locations, operating productivity improvements and
enhancing the technology environment. After the effect of these
projected earnings enhancements, based on Stream's current business
plans, GBPO believes that Stream should be able to generate
approximately $620 million to $650 million in revenues and an
estimated $60 million to $65 million in adjusted EBITDA (as defined
above) for the year ending December 31, 2009. GBPO has agreed to
pay $225.8 million, subject to certain adjustments for working
capital, for 100% ownership of Stream. The purchase price will be
paid by a combination of the assumption or replacement of existing
debt and capital leases totaling approximately $72.2 million, cash
payments of approximately $139.3 million and the issuance of
approximately 1.8 million units, each consisting of a share of GBPO
common stock and a warrant to purchase a share of GBPO common stock
at a strike price of $6 per share, valued at $14.5 million in the
transaction. The purchase price is subject to increase based on the
timing of the closing. On closing of the acquisition, $7.5 million
of deferred underwriting fees from the IPO due to Deutsche Bank
Securities Inc. and Robert W. Baird & Company will also be
paid. GBPO expects to have approximately $100 million of cash on
hand after the closing. Upon consummation of the acquisition, Mr.
Rick Rosen, a Managing Director of H.I.G. Capital LLC, will join
the Board of Directors of GBPO. The shares of GBPO issued in the
transaction to the shareholders of Stream will be subject to a lock
up period for nine months after the closing of the acquisition.
Scott Murray, who will continue to be Chairman and Chief Executive
of GBPO after the closing, said; "Stream is one of the premier
private CRM companies of scale in the market. We were attracted to
Stream because of its well-known brand, its reputation for service
excellence with its clients, its global service footprint, its
strong process driven culture and its ability to serve as a
platform for future BPO acquisitions. We believe that there are
opportunities to improve the revenue growth, operating performance
and enhance the technology environment of Stream under our
executive management. Stream will be our platform company from
which to build a large global BPO services company that offers many
cross functional services to global clients in multiple
jurisdictions located both on-shore and off-shore. We intend to
invest in the front end technology to create a world class customer
focused platform of scale. We also intend to expand Stream's
existing service locations into emerging areas that might include
China, the Philippines and South America. I am very excited to have
Rick Rosen, a Managing Director from H.I.G. Capital, join our Board
of Directors. Mr. Rosen has been responsible for overseeing H.I.G.
Capital's investment in Stream and has an outstanding track record
of helping build industry-leading business services companies."
Murray went on to say, "The Stream management team, led by CEO and
President Toni Portmann, who is going to continue with the company
post closing, has done a great job of building the Stream
franchise, driving customer satisfaction, expanding its footprint
and growing its revenue base over the past four years. We look
forward to working closely with the Stream team to build a fully
diversified and integrated service offering for its clients." Prior
to becoming Chairman and CEO of GBPO, Murray was CEO of 3Com
Corporation, CEO of Modus Media, President of Stream and Chief
Financial Officer of The Learning Company. The closing of the
transaction is subject to customary closing conditions, including
termination of the waiting period under Hart-Scott-Rodino and the
approval of the holders of the majority of outstanding shares of
common stock of GBPO issued in the IPO. It is also subject to
holders of less than 30% of GBPO's shares of common stock issued in
the IPO electing to exercise their conversion rights. Assuming
these conditions are met, GBPO anticipates completing the
transaction in mid-2008. Bear, Stearns & Co. Inc. provided
financial advisory services, including a fairness opinion, and
WilmerHale provided legal services to GBPO in connection with the
transaction. The company will host a conference call for investors
and analysts today, January 28, 2008, at 10:00 AM EST. The
conference call details are as follows: United States: (800)
553-0326 International: (612) 332-0342 About Global BPO Services
Corp. GBPO is a special purpose acquisition corporation formed in
June of 2007 for the purpose of acquiring a business process
outsourcing firm. GBPO consummated its initial public offering on
October 23, 2007. GBPO intends to file with the U.S. Securities and
Exchange Commission (SEC) a preliminary proxy statement in
connection with the proposed acquisition and to mail a definitive
proxy statement and other relevant documents to Global
stockholders. Stockholders of GBPO and other interested persons are
advised to read, when available, GBPO's preliminary proxy
statement, and amendments thereto, and definitive proxy statement
in connection with GBPO's solicitation of proxies for the special
meeting to be held to approve the acquisition because these proxy
statements will contain important information about GBPO, Stream
and the proposed acquisition. The definitive proxy statement will
be mailed to stockholders as of a record date to be established for
voting on the acquisition. Stockholders will also be able to obtain
a copy of the preliminary and definitive proxy statements, without
charge, once available, at the SEC's Internet site at
http://www.sec.gov/ or by directing a request to: Global BPO
Services Corp., 125 High Street, 30th Floor, High Street Tower,
Boston, MA 02110, telephone (617) 517-3248. GBPO and its directors
and its officers may be deemed participants in the solicitation of
proxies from GBPO's stockholders. A list of the names of those
directors and the officers and descriptions of their interests in
GBPO is contained in GBPO's prospectus dated October 18, 2007,
which is filed with the SEC, and will also be contained in GBPO's
proxy statement when it becomes available. GBPO's stockholders may
obtain additional information about the interests of its directors
and officers in the acquisition by reading GBPO's proxy statement
when it becomes available. Forward-looking Statements This
communication contains "forward-looking statements" which represent
the current expectations and beliefs of management of GBPO
concerning the proposed acquisition of Stream and other future
events and their potential effects on GBPO and Stream. The
statements, analyses, and other information contained herein
relating to the proposed acquisition, as well as other statements
including words such as "anticipate," "believe," "plan,"
"estimate," "expect," "intend," "will," "should," "may," and other
similar expressions, are "forward-looking statements" under the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are not guarantees of future results and
are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated. Those
factors include, without limitation: (1) whether the shareholders
of GBPO approve the proposed acquisition; (2) the satisfaction of
the other conditions to closing specified in the purchase
agreement, including without limitation, the receipt of the
required governmental approval of the proposed acquisition; (3) the
ability to successfully combine the businesses of GBPO and Stream;
(4) operating costs and business disruption following the
acquisition, including adverse effects on relationships with
employees; (5) changes in the stock market and interest rate
environment that affect revenues and costs; (6) diversion of
management time on acquisition related issues; (7) the ability of
Stream to retain its existing customers and attract new customers
following the closing; (8) retention of key employees upon
announcement of the proposed acquisition and following closing; (9)
general economic conditions such as inflation or recession; and
(10) general political and social conditions such as war, political
unrest and terrorism. The risks also relate to inherent business,
economic and competitive uncertainties and contingencies relating
to the business of Stream including: (1) failure to secure new
business or loss of important clients; (2) ability to maintain or
increase billing and utilization rates; (3) success of expansion
internationally; (4) competition; (5) ability to move the product
mix into higher margin businesses; (6) operating Stream as a public
company; (7) salary cost management; and (8) currency fluctuation
and exchange rate adjustments. This list is intended to identify
only certain of the principal factors that could cause actual
results to differ from those discussed in the forward- looking
statements. Readers are referred to the reports and documents filed
from time to time by us and to be filed in the future by us with
the Securities and Exchange Commission for a discussion of these
and other important risk factors that could cause actual results to
differ from those discussed in forward-looking statements. GBPO
undertakes no obligation to update or revise any forward-looking
statements to reflect subsequent events or circumstances. Global
BPO Services Corp. Reconciliation of Stream Holdings Corporation
Non-GAAP information For the Years Ended (in thousands of dollars)
(unaudited) Years Ended December 31, 2005 2006 2007 (preliminary)
Revenues $310,905 $ 405,547 $483,777 Less: Pass through revenues
(1) 7,150 14,129 12,930 $303,755 $391,418 $470,847 NON-GAAP
ADJUSTED EBITDA: Net income (loss) $(17,554) $(5,349) $(7,962)
Income taxes 4,939 4,523 3,750 Interest expense, net 4,646 8,473
12,010 Depreciation and amortization 4,132 7,664 11,950 EBITDA
(3,837) 15,311 19,748 Minority interest (298) (19) 0 Stock-based
compensation 125 223 517 Site closure/relocation charges 0 1,449
2,467 Management fees to stockholder 467 459 562 ADJUSTED EBITDA
$(3,543) $17,424 $23,294 (1) Pass through revenues are for
telecommunication costs that are contractually committed to be
billed to the client at cost and are shown in the company's
financial statements as revenues because Stream retains credit
collection risk for such amounts. DATASOURCE: Global BPO Services
Corp. CONTACT: Charles Kane, Chief Financial Officer, Global BPO
Services Corp., +1-617-517-3251, Web site:
http://www.globalbpo.biz/
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