USA INTERACTIVE TO MAKE STRATEGIC INVESTMENT IN POINTS; Agreement enables USAI to acquire majority within three years
Toronto, March 21, 2003 – Points International Ltd. (TSX Venture Exchange: PTS), which operates a loyalty points exchange for consumers at www.points.com, is pleased to announce that it has entered into an agreement with USA Interactive (NASDAQ: USAI), pursuant to which USA Interactive will make a Cdn$15.1 million investment in, and potentially acquire up to 55% of, Points.
Under the terms of the agreement, Points will issue one convertible preferred share (the "Preferred Share") and common share purchase warrants (the "Warrants") for aggregate cash consideration of $15.1 million. As at today's date and after giving pro forma effect to the issuance of the Preferred Share and the Warrants, the Preferred Share would be convertible into 18,432,427 Common Shares (19.9% of the Common Shares of Points (calculated on an adjusted fully-diluted basis)). Of the total investment, $12.4 million has been allocated to the purchase price of the Preferred Share resulting in an effective price per underlying Common Share of $0.67 and $2.7 million has been allocated to the purchase price of the Warrants. The Warrants are exercisable over three years to acquire up to 55% of the Common Shares of Points (calculated on as adjusted fully diluted basis) less the number of Common Shares issuable on conversion of the Preferred Share. As at today's date and based on Points current capitalization (after giving pro forma effect to the issuance of the Preferred Share and Warrants) the Warrants would be exercisable to acquire 72,247,700 Common Shares at an effective price per Common Share of $1.04 in year one, $1.17 in year two and $1.30 in year three. Each of the Preferred Share and the Warrants contain anti-dilution protection provisions.
The Preferred Share is redeemable by Points on March 31, 2013 for an amount (the "Redemption Amount") equal to the greater of $12.4 million plus 7% per annum and the market value of the Common Shares into which the Preferred Share then could be converted. The Preferred Share also is to be redeemed if there is a change of control of Points before the expiry of the Warrant for an amount equal to the greater of (i) 125% of the Redemption Amount and (ii) the greater of the value at the time of the change of control of the Common Shares into which the Preferred Share then could be converted and the value on the day prior to public announcement of the change of control transaction of the Common Shares into which the Preferred Share then could be converted. Additionally, the Preferred Share entitles the holder to various rights, including to:
· receive dividends with the holders of Common Shares on an "as converted" basis,
· vote with the holders of Common Shares on an "as converted" basis (and, until exercise of the Warrants, to a maximum of 19.9% of the votes that may be cast),
· vote separately as a series with respect to certain material transactions involving Points, and
· elect two members to the board of directors of Points and to have one member sit on each committee of the board of directors.
Under an investor rights agreement to be entered into upon closing of the transaction, the investor will have various rights, including prospectus qualification rights, pre-emptive rights in connection with further issuance of shares, matching rights for change of control transactions, approval rights over certain material transactions and rights to board and board committee representation.
The closing of the transaction is subject to customary closing conditions, including the receipt of all necessary regulatory approvals and that closing occur on or before July 14, 2003.
The board of directors of Points has approved this transaction and shareholders of Points holding more than 20% of the outstanding Common Shares have already irrevocably consented to the transaction.
"Over the past year we have made tremendous strides towards realizing our vision of developing a global marketplace to enable the seamless exchange of loyalty points, one of the world's largest currencies", said Points President Christopher Barnard. "Through our pointsxchange™, consumers can now trade points and miles of leading loyalty programs including AAdvantage, Delta SkyMiles and Priority Club Rewards (Six Continents Hotels). Our new partnership with USAI validates our efforts thus far, and places Points in a wonderful position to start our next stage of growth. Considering the success USAI has had in developing their numerous interactive properties, we are delighted to have USAI as a close strategic partner."
"Our management and board of directors are focused on delivering strong shareholder growth through the unique combination of our pointsxchange and our custom solutions business," said Points CEO Rob MacLean. "We believe this transaction will significantly enhance our prospects and should enhance shareholder value over time."
Additional information with respect to the transaction can be found in the material change report of Points that will be filed today on www.sedar.com, copies of which may also be obtained, after filing, from Points (please contact Moira Wright at 416-596-3257).
More about Points International Ltd. and Points Solutions
Points International offers innovative solutions to enhance the loyalty experience. Through a portfolio of Points Solutions, Points is forging rewarding partnerships with the world's leading loyalty players to deliver compelling value propositions.
The cornerstone of Points' unique loyalty program asset management system is pointsxchangeTM – the world's first loyalty program currency exchange that allows consumers to earn rewards faster by making all of their points count.
A growing portfolio of custom solutions also includes the innovative pointspurchaseTM solution, which powers the online sale of miles and points to members of leading loyalty programs including American Airlines, Air Canada, America West Airlines, Alaska Airlines, Cathay Pacific Airways and US Airways. Points International is also developing a pointspurchase solution for Six Continents Hotels.
Points Solutions, built on leading edge technology developed and managed in-house, are internationally marketed to travel providers and loyalty programs through a distribution alliance with Sabre, the leading provider of technology, distribution and marketing services for the travel industry.
Based in Toronto, Points International's shares trade on the TSX Venture Exchange under the stock symbol PTS. Points.com Inc. is a wholly owned subsidiary of Points International Ltd. Please see www.points.com for more information.
About USA Interactive
USA Interactive (Nasdaq: USAI) engages worldwide in the business of interactivity via the Internet, the television and the telephone. USA's multiple brands are organized across three areas: Electronic Retailing, Information & Services and Travel Services. Electronic Retailing is comprised of HSN, America's Store, HSN.com, and Home Shopping Europe and Euvía in Germany. Information & Services includes Ticketmaster, Match.com, uDate (transaction pending), Citysearch, Evite, Entertainment Publications (transaction pending) and Precision Response Corporation. Travel Services consists of Expedia (Nasdaq: EXPE), Hotels.com (Nasdaq: ROOM), Interval International, TV Travel Group and USA's forthcoming U.S. cable travel network. Please see www.usainteractive.com for more information.
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For more information, please contact:
Moira Wright
Points International Ltd.
416-596-3257
moira.wright@points.com
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