Essentially a takeover;
VANCOUVER, Jan. 7 /CNW/ - Global Election Systems Inc.
TRADING SYMBOL: GSM(TSE)
Global Election Systems Inc. (''Global'') has entered into a letter of
intent with BRELSH Holdings Ltd. pursuant to which they have agreed to
negotiate the terms of a formal agreement providing for the merger of the two
companies, or a subsidiary of BRELSH created for the purpose of consummating
the merger. Under the merger, which would be undertaken by way of a plan of
arrangement, BRELSH would acquire all the outstanding common shares of Global
by paying its shareholders $50,000,000 (US), or approximately $2.71 (US) per
share, and by BRELSH issuing a right to Global's shareholders enabling them to
acquire, for no further consideration, .05 of a share of BRELSH for each
outstanding common share of Global. To the extent that certain presently
outstanding options or warrants are exercised, a further 1,436,667 common
shares of Global may be issued prior to the closing of the merger. If these
common shares are issued, the per share cash purchase price to be paid under
the merger would decrease. The rights to acquire BRELSH shares will only
become exercisable if the public market capitalization of BRELSH exceeds
$200,000,000 (US). They would be exercisable for a two year period, following
the date they become exercisable. If the rights do not become exercisable
within seven years of the completion of the merger, they will expire.
The plan of arrangement between the two companies would be required to be
approved by 75% of the total number of votes of Global's common shareholders
represented at an extraordinary general meeting of Global. Under the letter
of intent, this meeting would be required to be held on or before May 4, 1999.
The closing of the merger will be contingent on the receipt of all necessary
securities regulatory approvals, compliance by the parties with the
Hart-Scott-Rodino Antitrust Improvements Act (if necessary), the absence of
any pending or threatened litigation regarding the merger, the satisfactory
completion of each parties' due diligence and on Howard Van Pelt, Global's
President, entering into a satisfactory employment agreement with BRELSH. If
the merger is approved, it is contemplated that Howard Van Pelt would become a
director of BRELSH.
Global and BRELSH have agreed to consider alternative procedures to
consummate the transaction, including a takeover bid, if an alternative
procedure is determined to be more efficient and economical.
The parties have agreed that transactions contemplated by the letter of
intent must be closed on or before the later of June 1, 1999 or 40 days after
the filing of any required notification under the Hart-Scott-Rodino Act.
Global has the right to terminate the obligations specified in the letter of
intent by paying BRELSH the sum of $750,000 (US).
Mr. David Brown, Global's Chairman of the Board, Mr. Howard Van Pelt, and
Mr. Clinton Rickards, a director of Global, have each agreed with BRELSH to
vote their shares in favour of the merger at Global's extraordinary general
meeting.
Kalamazoo based BRELSH Holdings, Inc., owns Business Forms Group, Inc.,
doing business as Doubleday Bros. & Co., a 100 year old supplier of electoral,
governmental, educational and business printing products that services
communities throughout the United States. Additionally, BRELSH owns Vista
business Forms, Inc., Oshtemo, Michigan, a 33 year old company that
manufactures business forms and services its 500 distributors nationally. The
addition of Global will enhance BRELSH's printing and packaging of election
equipment products throughout the world.
The directors feel that the merger offers a favourable price to
shareholders, a strong ongoing company that permits the continued
participation of its employees with a complementary product line and
continuity of excellent service to customers for which Global is noted.
Global develops, manufactures and markets a full array of products for
the tabulation and management of elections, plus provides service and support
from its own or dealer locations throughout North America on an international
basis. Global's products are widely recognized as utilizing the most advanced
technology in the marketplace.
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