Global BPO (stock symbol: [t]000)[/t]), which closed today at $7.35 per share, a deep discount from its liquidation value of $7.91, has moved aggressively to shore up support for its proposed acquisition of Stream Holdings:
Global BPO Services Announces
Monday June 2, 4:15 pm ET
-- Ares Corporate Opportunities Fund II, LP Enters Into Agreement to Invest $150 Million in Convertible Preferred Stock of Global BPO Upon Closing of Acquisition of Stream Holdings;
-- Global BPO Agrees to Tender for Up to 20.625 Million Common Shares at $8.00 Per Share Following Close of Stream Acquisition;
-- Stream and Global BPO Agree to Revise the Purchase Price for the Acquisition of Stream to $200 Million
BOSTON, June 2 /PRNewswire-FirstCall/ -- Global BPO Services Corp. (Amex: OOO - News) announced today several matters in connection with its proposed acquisition of Stream Holdings Corporation ("Stream"), a leading provider of global customer relationship management ("CRM") and other business process outsourcing ("BPO") services to Fortune 1000 companies.
Global BPO Services Corp. (the "Company" or "Global BPO") entered into an agreement to sell 150,000 shares of preferred stock for $150 million to an investment fund managed by an affiliate of and within the private equity group of Ares Management LLC (collectively, "Ares"). The shares of preferred stock will be convertible into common stock of Global BPO at $8.00 per share (subject to adjustment); bear an annual dividend rate of 3% calculated semi-annually (payable in additional stated value or cash at the company's option); be convertible at the Company's option after two years; if the common shares of the Company trade at a price which exceeds $12.00 per share for at least 20 trading days within a period of 30 consecutive trading days; be redeemable at the holder's option after seven years; and will have the same voting rights as the company's common shares. In addition, in a separate transaction, the founders of Global BPO have agreed to sell 7,500,000 warrants that were purchased by them in a private placement upon the company's initial public offering to Ares for $.001 per warrant, or $7,500 in total. Upon closing of the transaction, Ares will have the right to appoint up to three members to the Board of Directors of Global BPO. The closing of the convertible preferred share transaction is subject to applicable regulatory approvals, Global BPO stockholder approval and the closing of the proposed Stream acquisition, as well as other customary closing conditions. In the event that the total number of shares of Global BPO common stock elected by stockholders to be converted into a pro rata portion of the cash held in the trust account is greater than zero but less than or equal to 9,374,999 shares of common stock, Ares will receive a pro rata increase in the number of common shares into which the convertible preferred shares are convertible up to a maximum of 6,250,000 additional shares of common stock.
Global BPO will use the proceeds from the issuance of the convertible preferred shares and its other available cash resources (including availability under its proposed revolving credit facility and term debt of approximately $108,000,000) to tender for the purchase of up to 20,625,001 shares of its outstanding common stock at $8.00 per share. Global BPO will commence the tender offer shortly after the closing of the Stream and convertible preferred stock transactions, and the offer will remain open for 20 business days. The tender offer will be available to all holders of outstanding shares of common stock; the founding shareholders of Global BPO and Ares have agreed not to participate in the tender offer.
Stream remained a leader in providing global customer relationship management and other business process outsourcing services to Fortune 1000 companies as it continued its growth in the BPO market with its expansion into several new international sites in fiscal year 2007. In conjunction with the Ares convertible preferred share transaction, Global BPO and Stream have revised their merger agreement to reflect a reduction in the purchase price from $225,800,000 to $200,000,000, which will be paid by a combination of cash and the assumption or replacement of outstanding indebtedness of Stream. The purchase price is subject to increase based on the timing of the closing. No shares of Global BPO stock will be issued in the merger transaction with Stream.
Scott Murray, Chairman and Chief Executive of Global BPO, said; "We are excited to partner with Ares to complete our proposed acquisition of Stream. Ares is a terrific strategic investor for us in this transaction. They have a deep understanding of both the services industry and capital markets." Murray went on to say, "The combination of the tender offer and the reduction in the Stream purchase price provides both an attractive value proposition and liquidity option for our stockholders. We believe that for those wishing to tender, our proposal offers a cash value in excess of the liquidation value of the trust fund, and for those wishing to hold their shares, Global BPO represents an excellent opportunity for those stockholders to partner with a proven executive team, build on the strong momentum in the Stream business and to invest along side a world class professional investment firm."
David Kaplan, Senior Partner of Ares, said; "We are excited to have the opportunity to partner with Scott and his team to build on the growth and earnings potential that has already been created at Stream. We believe that Scott's vision to create an integrated BPO company will offer international corporations the opportunity to select a world-class provider of BPO Services across many unique corporate functions using common technology architecture. Ares knows Stream and Scott Murray well, as our firm was an investor in its mezzanine debt securities when the company was led by Scott."
Stream provides CRM and other BPO services to leading technology, communications and consumer electronics companies. Stream has approximately 15,000 employees with 30 service locations in 16 countries, including the United States, Canada, Europe, North Africa, India and Latin America. Stream reported revenues of $484 million in the year ended December 31, 2007, as compared to revenues of $405 million for the year ended December 31, 2006.
The closing of the Stream acquisition is subject to customary closing conditions, including the approval of the holders of a majority of outstanding shares of common stock of Global BPO issued in its initial public offering in October 2007 (the "IPO"). The closing is also subject to holders of less than 30% of Global BPO's shares of common stock issued in the IPO electing to exercise their conversion rights. Assuming these conditions are met, Global BPO anticipates completing the acquisition in the third quarter of 2008.
The company will host a conference call for investors and analysts today, June 2, 2008, at 5:00 pm EDT. The conference call details are as follows:
United States: (800) 230-1092
International: (612) 234-9960
For more information contact:
Scott Murray, CEO
617-517-3250
scottmurray@globalbpo.biz
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