THK has signed a letter of intent to sell off some of its portfolio companies. The transaction is contingent upon the resolution of some significant contingencies (see last paragraph).
Think Partnership Announces Letter of Intent to Sell its Online Dating and Education Subsidiaries
Wednesday March 22, 8:58 am ET
NORTHBROOK, Ill.--(BUSINESS WIRE)--March 22, 2006--Think Partnership Inc., formerly known as CGI Holding Corporation ("THK") (AMEX:THK - News) today announced that it has signed a letter of intent to sell its online dating and online education businesses to Mountains West Exploration Inc. ("MWXI") (OTCBB: MWXI.OB - News).
If the transaction is completed, the Company would sell its wholly-owned online dating subsidiary Cherish, Inc., Clearwater, Fla. ("Cherish"), including Cherish's direct and indirect subsidiaries Personals Plus, Inc., Apollo Beach, Fla. ("PPI"), and Vintacom Media Group, Inc., Edmonton, Alberta, Canada ("Vintacom"), and the Company's wholly-owned online education subsidiary Real Estate School Online Inc., Miami, Fla. ("RESO") (collectively, the "Selected Subsidiaries"), to MWXI for an aggregate of $21,000,000 in cash and unregistered common stock of MWXI valued at $9,000,000 at the closing of the transaction (the "MWXI Shares"). The Company would expect to pay taxes on a significant portion of the sale price, and THK cannot provide any assurance whatsoever regarding the potential market value of the MWXI Shares due to the illiquid nature of MWXI's common stock which to date has rarely traded. The Selected Subsidiaries were acquired by the Company during the past two years, for an aggregate of $10,712,500 in cash, $11,212,500 in common stock of THK, and $1,200,000 in notes, or a total of $23,125,000. MWXI will assume all of the contingent obligations of THK in regard to any earnout obligations or other payments owed to the former shareholders of the Selected Subsidiaries. In addition, MWXI and THK will enter into a mutually acceptable agreement in regard to the use by MWXI and its current and future subsidiaries of services provided by THK's current and future subsidiaries.
T. Benjamin Jennings, Chairman of THK, stated, "We are excited about the new beginning that our most recent financing and this follow-on transaction provides us, as compelling events for our company. The support that our new capital structure provides us, in addition to the clarity of focus around our direction as a company, is an exciting proposition for our management team and our shareholders."
MWXI has paid the Company a deposit of $250,000 to be credited against the purchase price if the transaction is completed. The $250,000 deposit will only be returned to MWXI if the Company sells the Selected Subsidiaries to a third party. In that circumstance, the Company has also agreed to pay MWXI a breakup fee of $250,000.
If the transaction is completed, the Company will have the right to appoint not less than 40% of the Board of Directors of MWXI until the later of three years after the closing or the date when the Company is no longer the largest stockholder of MWXI.
Think Partnership CEO Gerard M. Jacobs stated, "We are under no pressure to divest ourselves of these businesses as they are profitable. However, after due consideration, we believe that this transaction, if completed, would clarify our business model, and better focus our management time and capital on integration and growth opportunities for our online marketing and advertising business segment while allowing a significant pure play opportunity for these important but now, non-core assets."
Think Partnership President Scott Mitchell added, "This transaction will help us build Think Partnership's substantial online marketing and advertising business segment into an industry leader. At the same time, this transaction would allow Think Partnership to retain a considerable ownership and leadership position in a significant public company led by people whom we respect, and that we expect would grow faster as part of a profitable publicly traded company whose management and acquisition talents are focused solely on their core business segment."
The Company cannot provide any assurance whatsoever that this proposed transaction will be completed within the ninety days contemplated by the letter of intent, if at all. Closing of the transaction is subject to a number of conditions including, among other things, MWXI's ability to finance the cash portion of the purchase price. MWXI is a publicly traded "shell" corporation which does not currently have the capital needed to complete this transaction. The Company cannot provide any assurance whatsoever regarding MWXI's ability to raise the capital needed to complete this transaction. Closing of the transaction is also subject to THK's satisfactory due diligence of MWXI and MWXI's satisfactory due diligence of the Selected Subsidiaries, the negotiation and execution of definitive agreements, the receipt of all required consents, and Board of Director approvals of MWXI, THK and the Selected Subsidiaries. Closing of the transaction will also be subject to the receipt by THK of an appropriate legal opinion from counsel to THK regarding the transaction, and of an opinion from a qualified independent investment bank regarding the fairness of the terms and conditions of the transaction to THK's shareholders, in light of the fact that MWXI currently is controlled by individuals who are shareholders of THK and who are actively involved in certain other business transactions and companies with members of THK's management and Board of Directors.
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