WTL Waterlogic

RNS Number:1029Z
World Travel Holdings PLC
19 February 2001



                          WORLD TRAVEL HOLDINGS plc


  Extends Global Footprint with Acquisition of Canadian and Asian businesses


 Pays up to #5 million for online travel agents' fare services in both Canada
                             and South East Asia


London, 19 February 2001 - World Travel Holdings plc ("WTH"), the global
travel technology and services business, today announces that it has acquired
NetFaresOnline.com Inc. ("NFO"), a Canadian company which operates a business
providing travel agents in Canada with on-line access to the negotiated fares
of consolidators. This business is similar to the fare 1 service offered by
WTH and represents a strong strategic fit with both this and WTH's
consolidator business.


The consideration for the acquisition is up to a maximum of C$10 million (#4.6
million). An initial payment of C$3.0 million (#1.4 million) will be satisfied
by the issue of 2,727,273 new ordinary shares of 1p each in WTH ("new WTH
shares"). Additional consideration of up to a further C$7.0 million (#3.2
million) may be payable, to be satisfied by the issue of further new WTH
shares, upon the achievement of certain financial targets. Further details of
the consideration are set out in the Appendix to this announcement


This acquisition brings a number of significant benefits to the Group's
product offering:


    - An established base of nearly 2,500 travel agent customers in Canada, a
    market the Group sees as a natural adjunct to the US market which Fare 1
    is targeting.


    - Relationships with 30 consolidators in the Canadian market (with more
    being negotiated) which will provide the Group with access to a wide range
    of competitive air fares for travel agents to sell.


    - The NFO software, for which the Group will have an exclusive worldwide
    multi consolidator licence, can be used in association with fare 1 to
    enable fares from consolidators to be offered to not only the NFO
    registered travel agents but also the fare 1 registered agents and,
    indeed, the Group's consumer site.

NFO has an exclusive worldwide licence to use multi-consolidator software
(developed by Softvoyage, Inc, one of the vendors of NFO) which enables travel
agents to access and book the negotiated fares of multiple consolidators
simultaneously. While at first glance very similar to the Fare 1 service
provided by WTH, the NFO offering is better suited to providing the conduit
between smaller, independent travel agents and consolidators.


NFO has nearly 2,500 Canadian travel agent customers and in October 2000, its
fifth full month of operation, NFO achieved approximately 5,900 bookings and
reservations, generating over C$20,000 of transaction revenues. Access to the
current service is typically provided free, with revenue being derived from a
charge to the agent per initial reservation and a further charge per confirmed
booking. This approach to market is however being modified in some
geographical areas so that a minimum number of monthly bookings is required
for an agent to have access to the service. NFO's business model has a
relatively low fixed cost base and projects profitability in the near future.

NFO has not yet produced any audited accounts. Its net assets at 30 November
2000 were estimated to be C$91,000 (#41,000).


Naman Budhdeo, chief executive and a founder of NFO and one of the two
vendors, has entered into an agreement to continue to run the NFO business
until at least July 2003. The vendors have undertaken not to dispose of any of
the new WTH shares relating to the initial consideration for before February
2002 and not to dispose of any of the new WTH shares issued to them until 12
months after the periods in respect of which they were earned.


World Travel Holdings plc also announces the acquisition by its 75 per cent.
owned subsidiary, fare 1 (Asia) Limited, of Online Travel Agency Limited
("OTA"), a Hong Kong company which provides the South East Asian travel agency
market with access to consolidator fares. The consideration for the
acquisition is cash of US$24,065 (#16,600) representing the agreed value of
the net assets of OTA.


This acquisition brings further significant benefits to the Group's product
offering:


    - Access to Asian originating fares for sale to the travel agency market.


    - Access to a low cost fare management facility in Guangzhou, PRC.


    - A foothold in the South East Asian travel market, one of the largest and
    most dynamic in the world and featuring an array of consolidated air
    fares.

In association with this acquisition, WTH has entered into a shareholder
agreement with Yasia Limited, a company controlled by Henry Luk, the newly
appointed Chief Executive of Fare 1 (Asia) Limited. Pursuant to that
agreement, WTH has agreed to advance an interest bearing loan of up to
US$115,732 (#77,156) to Fare 1 (Asia) Limited to develop the business. In
addition, this agreement provides put and call options for WTH to acquire the
minority holding in Fare 1 (Asia) Limited either on a change of control of WTH
or after 5 years. The consideration under the option will be based on the
relative profitability of Fare 1 (Asia) Limited and WTH and will be capped at
US$ 12.0 million.


A full review of the Group's business and current trading will be given in the
Group's preliminary announcement of results for the year ended 31 December
2000, which, it is expected, will be announced in mid-March.


Commenting on the acquisitions, Jonathan Biles, Chief Executive of WTH said "
These acquisitions represent significant steps forward in both North America
and Asia towards our ambitions for a global trade offering. These deals not
only bring us access to substantial new territories and numerous new customers
and revenue streams, they also have the added benefit of being a strong
strategic fit across all areas of our business."




Enquiries:

Jonathan Biles
World Travel Holdings plc                                         020 7456 1352

James Melville-Ross or Emma Rutherford
Financial Dynamics                                                020 7831 3113






NOTES TO EDITORS:


World Travel Holdings plc

WTH distributes travel products and services, predominantly through the
Internet and mainly to travel agents, using the Group's proven technology
platform Powerflyer. WTH supplies scheduled and negotiated fares, car rental,
hotel bookings, travel information and travel insurance over the Internet.
These products and services are supplied through distinct channels: Travac and
Fare 1 for travel agents, WorldTravelDirect.com for consumers and Trident for
corporate customers.


The travel market:

- Global travel market estimated at over US$500 billion in air travel alone
each year

- Only 20 per cent. of those who research travel online then book online

- It is currently estimated that approximately 12 per cent. of the global
travel market will be booked directly on the Internet by consumers by 2003

- It is currently estimated that 88 per cent. of travel commerce will be
booked by other means - principally travel agents - by 2003

- Over 40,000 travel agency offices in the US with estimated 250,000 personnel

- Each US agency location processes on average 350 tickets per month

- 8,500 travel agency locations in the UK with 23,000 travel agency managers


For more information, log on to www.worldtravelholdings.com






APPENDIX


Consideration


The acquisition will be effected by a newly-incorporated Canadian subsidiary
of WTH, "Newco", issuing to the vendors 2,727,273 exchangeable shares, 2 class
A preferred shares, 2 class B preferred shares and 2 class C preferred shares
of Newco. The three classes of preferred shares will convert into an
appropriate number of exchangeable shares in Newco according to the
achievement of the financial targets described below. Each exchangeable share
of Newco is exchangeable for one new WTH share, generally at the vendors'
option during the next six years.


The financial targets for conversion of the three classes of preferred share
into exchangeable share relate to the levels of revenue generated by NFO in
future periods. For each class, if a minimum level of turnover is not reached
in the relevant period, the relevant preferred shares will be redeemed for a
nominal consideration. The first period (applying to the class A preferred
shares) is the six month period with the highest level of turnover starting on
or after 1 February 2001 and ending on or before 30 April 2002. The second
period (applying to the class B preferred shares) is the twelve month period
with the highest level of turnover between the same dates. The third period
(applying to the C preferred shares) is either (i) if the minimum turnover
required to trigger additional consideration in the second period has been
met, the twelve months with the highest turnover starting after the second
period and ending on or before 31 July 2003 or (ii) otherwise, the twenty four
month period with the highest turnover starting on or after 1 February 2001
and ending on or before 31 July 2003.


The value of the exchangeable shares to be issued for the class A preferred
shares will be computed by reference to the value of 2,727,273 new WTH shares.
If such value exceeds C$3.0million, no further exchangeable shares will be
issued on conversion of the class A preferred shares. If the value of such
shares is less than C#3.0 million, then the further exchangeable shares to be
issued will have a value (taking the value of each as equal to a new WTH share
at that time) equal to the difference provided the turnover in the first
period is at least C$500,000 or equal to 80% of such difference if that
turnover is greater than C$400,000 but less than C$500,000.


The value of the additional consideration due on conversion of the class B and
class C preferred shares will be calculated as a multiple (of between 0.8 and
2.0 dependant on the relevant turnovers) of the relevant turnover. The minimum
turnovers are C$0.7 million for the second period and for the third period
either C$1.05 million (for a twelve month period) or C$1.75 million (for a
twenty four month period). The levels of turnover at which the multiplier
reaches 2.0 are respectively C$1.0 million for the second period and either
C$1.5 million or C$2.5 million for the second period.


The number of exchangeable shares to be issued will be computed by dividing
the additional consideration amount calculated as above by the price of a WTH
shares at the relevant time. In respect of the conversion of the class B
preferred shares, the minimum price for a WTH share for this calculation will
be 60p and the maximum will be 250p. For the conversion of the class C
preferred shares, the minimum price will be 60 p and the maximum 400p.


In any event, the aggregate of the value of the exchangeable shares issued on
conversion of the three classes of preferred shares valued at the respective
values used for calculating the conversion ratios shall not exceed C$7.0
million.


Application will be made for all the new WTH shares to be issued in
consideration for the acquisition of NFO to be admitted to trading on the
Alternative Investment Market of the London Stock Exchange at the time of
their issue. All such shares will rank pari passu in all respects with the WTH
shares then in issue.

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