Some local coverage of the Terra Nova-ClearPoint transaction:
Local staffing company going public
By JOHN WILEN
The Intelligencer
ClearPoint Business Resources, a New Britain Township staffing firm formerly known as Mercer Staffing, agreed to be acquired by a publicly-traded Toronto company in a complicated transaction from which ClearPoint will emerge as a public company.
ClearPoint will be bought by Terra Nova Acquisition Corp., a special purpose acquisition corporation or SPAC, for about 6 million shares of Terra Nova stock.
Terra Nova is not an operating company. It was formed in 2004 by several investment and company valuation experts for the express purpose of buying an operating company. The company raised about $30 million in a 2005 initial public offering.
This type of company is also known as a “blank check” company, in that its investors are essentially providing its operators with a blank check to acquire other companies.
After the acquisition, akin to a reverse merger, Terra Nova will change its name to ClearPoint Business Resources, and seek a listing on the Nasdaq National Market. At the moment, Terra Nova shares trade on Nasdaq's over-the-counter or bulletin board market, an exchange frequented by smaller companies that do not meet the listing requirements for a major exchange.
Prior to Thursday morning, the stock last traded at $5.20 on Aug. 1. In Thursday trading, Terra Nova shares rose a penny to $5.21.
The companies declined to comment on the transaction, citing Securities and Exchange Commission “quiet period” rules surrounding public stock offerings.
It's unclear whether the company's headquarters will remain in Chalfont. But in a typical SPAC transaction, the purchased operating unit becomes the company headquarters. ClearPoint CEO Mike Traina and President Chris Ferguson will remain in their posts.
Under the transaction, Traina and Ferguson, who own 93 percent of ClearPoint's stock, will receive about 5,997,700 Terra Nova shares. Other shareholders will receive an additional 600 shares.
The transaction's overall value is unclear, and will likely not be firmly established until a later date. At Terra Nova's pre-announcement price of $5.20 a share, the purchase price would be about $31.2 million. That value is likely to change as Terra Nova's stock price changes. Terra Nova also plans to spend about half of its approximately $30 million in cash to pay down ClearPoint debt, which would push Terra Nova's investment to $46 million, at pre-announcement stock prices.
After the transaction, ClearPoint shareholders will own 47 percent of the combined company's shares. Its board will consist of three ClearPoint appointees, three Terra Nova appointees, and one joint appointee.
The ClearPoint shareholders have agreed not to sell any of their Terra Nova shares until April 2008.
“This is a tremendous vote of confidence on the part of the ClearPoint principals in the future of ClearPoint's business,” said Vahan Kololian, chairman and CEO of Terra Nova, in a statement.
For companies like ClearPoint that are looking to go public, a SPAC transaction makes sense because it's less costly, and requires less regulatory scrutiny, than a straight-up IPO.
“This merger provides us with the growth capital required to achieve our aggressive goals and support current business development,” Traina said in a statement.
Still, the deal is subject to regulatory approval. Sean Sands, a Navigant Capital Advisors director and Doylestown native, acted as financial advisor.
ClearPoint was founded in 2001 as Mercer Staffing, and has grown through a number of acquisitions. The company changed its name to ClearPoint in June. ClearPoint has 120 employees in 25 offices throughout the U.S., and has about 3,500 temporary staffers placed with client firms. It's unclear how many local employees the company has.
In 2005, ClearPoint lost $1.2 million on sales of $84 million, compared to a loss of $386,000 on sales of $28.7 million in the previous year. The large change reflects acquisitions, including that of Quantum Resources of Richmond, Va.
In 2005, Terra Nova generated a profit of $245,600, or 2 cents a share, due entirely to interest from government securities and other investments in which it temporarily placed the $30 million raised from its IPO.
John Wilen can be reached at (215) 345-3169 or jwilen@phillyBurbs.com.
August 13, 2006 7:07 AM
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