Southpeak Interactive to Access Public Markets Through Business Combination With Global Services Partners Acquisition Corp.
Wednesday January 16, 1:51 pm ET
One of the Fastest Growing Video Game Publishers to Expand Product Offering and Global Reach
MIDLOTHIAN, Va., Jan. 16 /PRNewswire/ -- SouthPeak Interactive, LLC ("SouthPeak") and Global Services Partners Acquisition Corp. ("GSPAC") (OTC Bulletin Board: GSPA - News, GSPAB - News, GSPAW - News, GSPAZ - News) jointly announced today that they have agreed to a business combination resulting in a new publicly held entity that will be called SouthPeak Interactive Corporation. The transaction will allow SouthPeak to access the public markets to accelerate its growth strategy and take advantage of strong industry growth trends.
SouthPeak is a fast growing video game publisher with a unique production model that exclusively utilizes independent studios to source and produce innovative video games. This model allows the company to leverage leading-edge independent development talent and minimize fixed overhead, thereby maximizing operational flexibility and profits. SouthPeak expects to achieve approximately $30 million in revenues for its fiscal year ending June 30, 2008, representing 140% growth over fiscal year 2007 revenues. Fiscal year 2008 EBITDA is expected to be approximately $4.5 million.
The transaction values SouthPeak at approximately $31 million based on the last sale price of $5.22 for GSPAC's Class B Common Stock as of January 15, 2008. The consideration paid at closing will be comprised of 5,000,000 shares of common stock and $5 million in cash.
The existing executive management team of SouthPeak, Terry Phillips and Melanie Mroz, will become, respectively, Chairman and CEO of the new company. At the closing, SouthPeak's management will own approximately 42% of the total 11,900,100 shares outstanding in SouthPeak Interactive Corporation.
Rahul C. Prakash, Chairman and CEO of GSPAC, said, "GSPAC's mission was to find a company in a dynamic business sector with high growth, strong operational performance and at an attractive price so that we could create real and lasting value for our stockholders. We found all of these in SouthPeak."
Melanie Mroz, CEO of SouthPeak, added, "SouthPeak is already an established player in the industry with significant retail sales expertise. Our unique operating model leverages an expanding universe of game developers to maximize profits and creative potential. We have a winning portfolio of games and a robust development pipeline." Mroz continued, "The financial resources provided by this transaction will allow us to accelerate our strategy of expanding our product portfolio and continue to outpace the industry in terms of top and bottom-line growth."
The video game industry is growing rapidly with U.S. video game software sales expected to grow from $6.5 billion in 2006 to $13.6 billion in 2009, according to Goldman Sachs. Global video game software sales are expected to grow to $55 billion by 2009 as reported by PricewaterhouseCoopers.
Terry Phillips, Chairman of SouthPeak, said, "This transaction brings SouthPeak public at an opportune moment in the video game industry. Overall industry sales are growing rapidly and the customer base is diversifying, opening up significant opportunity for new video game products. SouthPeak is very well positioned to deliver unique and profitable game concepts and drive substantial stockholder value as a result."
Abhishek Jain, President of GSPAC, said, "SouthPeak operates in one of the fastest growing sectors of the media business. They have a highly regarded management team with incredibly deep retail experience and established relationships. The company already has a track record of strong financial performance and is well positioned to scale its unique operating model. We believe that the consideration to be paid for SouthPeak is very favorable to our stockholders and we are very enthusiastic about this transaction."
After giving effect to the completion of the business combination and the automatic conversion of GSPAC's Class B Common Stock into ordinary common stock, and assuming that none of its stockholders of Class B Common Stock exercise their conversion rights, there will be 11,900,100 shares outstanding. In addition, there will be 7,517,500 Class W warrants and 6,387,500 Class Z warrants outstanding. The publicly traded Class W and Z warrants are exercisable at $5.00 per share and callable at $7.50 and $8.75, respectively. The current owners of SouthPeak may earn up to 3,000,000 additional shares, subject to certain earnings and share price targets. The transaction, which has been unanimously approved by the Board of GSPAC, is subject to GSPAC stockholder approval, regulatory approval and other customary closing conditions. GSPAC anticipates completing the transaction in April 2008.
About SouthPeak
SouthPeak Interactive, LLC develops and publishes interactive entertainment software for all current hardware platforms including: PLAYSTATION®3 computer entertainment system, PSP® (PlayStation® Portable) system, PlayStation®2 computer entertainment system, Xbox 360(TM) video game and entertainment system, Wii(TM), Nintendo DS(TM) and PC. SouthPeak's games cover all major genres including action/adventure, role- playing, racing, puzzle/strategy, fighting and combat. SouthPeak's products are sold in retail outlets in North America, Europe, Australia and Asia. SouthPeak is headquartered in Midlothian, Virginia, and has offices in Grapevine, Texas and London, England. www.southpeakgames.com
<snip>
biz.yahoo.com |
