The terms of the transaction originally announced in June, have now been finalized and approved by the Boards of Directors of both companies. Under the terms of the final offer, ISACSOFT will issue 36,000,000 Class "A" shares at a price of $0.30 per share valued at $10,800,000, which represents the mid point of the range as set forth in a valuation report prepared by Westwind Partners, Inc. and, 30,046,240 representing shares of ISACSOFT owned by ISAC Technologies. Since these shares represent a redistribution of currently outstanding shares, there will be a net increase of 36,000,000 in the issued and outstanding shares of ISACSOFT upon completion of this transaction.
Proposed acquisition of ISAC Technologies
The proposed transaction consists of the acquisition by ISACSOFT of all the issued and outstanding shares of the capital of ISAC Technologies in exchange for Class "A" shares of ISACSOFT. ISAC Technologies currently owns 30,046,240 Class "A" shares of ISACSOFT representing approximately 20.1% of the issued and outstanding shares of ISACSOFT. Some of the shareholders of ISAC Technologies are directors or senior officers of ISACSOFT and/or ISAC Technologies. Immediately after the completion of the proposed transaction, ISAC Technologies will be wound up into ISACSOFT and the shares held by ISAC Technologies in ISACSOFT will be cancelled.
The Proposed Transaction is subject to the approval of the Corporation's shareholders and the approval of the regulatory authorities.
ISAC Technologies is a provider of information technology and business process outsourcing services, systems integration and business intelligence services, software distribution, translation and localization services, and systems solutions and technical support services. ISACSOFT has significant relationships with and is highly dependent on ISAC Technologies for business as it provides to ISAC Technologies on a contractual basis support of its outsourcing and other activities. Approximately 56% of the consolidated revenues of the Corporation for the six months ended June 30, 2004 were the result of activities performed by ISACSOFT under contract for ISAC Technologies. ISACSOFT is highly reliant on ISAC Technologies for the provision of management and administrative services and ISAC Technologies has also been instrumental in identifying business opportunities for ISACOSFT from the customer relationships of ISAC Technologies.
The integration of ISAC Technologies with ISACSOFT is expected to provide increased business opportunities and a more complete product offering for customers and will also result in an increase of the scale of the business of ISACSOFT thus creating economics of scale and to be better able to meet the needs of larger business enterprises.
The following persons can be considered as interested parties (as defined in the applicable policies) in the proposed transaction since they are shareholders of ISAC Technologies and directors or senior officers of the Corporation and/or ISAC Technologies:
|Insider Relationship||ISAC Shares Owned||%Owned|
|Ronald Brisebois (Executive and Director) (1)||3,317,514||37.4%|
|Normand Theberge Executive - (ISAC Technologies )||597,988||6.7%|
|Vincent W. Salvati (Executive and Director) (1)||325,798||3.7%|
|Sylvain Belleau (Executive - ISAC Technologies)||100,204||1.1%|
|Stephane Gonthier (Director -ISAC Technologies)||56,870||0.7%|
|J V Raymond Cyr Director - ISAC Technologies)||22,639||0.6%|
|Pierre Boivin (Director -ISACSOFT)||49,357||0.5%|
|Claude Castonguay Director -ISACSOFT )||43,812||0.4%|
|Michel Lozeau (Director - ISAC Technologies)||36,579||0.3%|
|Michel Vincent (Executive - ISACSOFT)||15,800 0||2%|
|(1) Messrs. Brisebois and Salvati hold the same offices in both ISACSOFT and ISAC Technologies.|
All shareholders of ISAC Technologies, including those listed above will receive approximately 7.44 Class "A" shares of ISACSOFT for each common share of ISAC Technologies they hold. The interested parties listed above will not receive any additional benefit that is not received by the other shareholders of ISAC Technologies.
The proposed transaction is exempt from the formal valuation requirements of Policy 61 501 of the Ontario Securities Commission, Policy Q 27 of the Autorité des marchés financiers and Policy 5.9 of the TSX Venture Exchange Policy since it is not an amalgamation or merger and neither the fair market value of the net assets of ISAC Technologies, nor the fair market value of the consideration for, the transaction, insofar as it involves all interested parties, is greater than 25% of the market capitalization of ISACSOFT.
The proposed transaction is exempt from the formal valuation requirements of the policies referred to above, however, the TSX Venture Exchange has required that a formal valuation be obtained. Westwind Partners Inc. was retained to perform an independent valuation of the assets of ISAC Technologies excluding the Class "A" shares of ISACSOFT held by ISAC Technologies. The formal valuation report dated October 1, 2004, which establishes the fair market value of the assets of ISAC Technologies other than the Class "A" shares of ISACSOFT held by ISAC Technologies in the range from $9,825,000 to $11,825,000, will be included in its entirety in the information circular to be sent to shareholders.
No prior valuation of ISACSOFT has been obtained by ISACSOFT in the previous 24 months.
ISACSOFT is a provider of content-based software solutions to its international customers. The revenue model is based on software licenses, copyrighted content development, recurring revenues and services. The solutions of ISACSOFT include knowledge management, e-Learning management, Library management, document management. ISACSOFT is headquartered in Montreal, Canada and supports operations in Quebec City, New York, Paris, London, Cologne, and The Hague, as well as an international network of distributors.
For further investor information please contact:
Vincent W. Salvati
Chief Financial Officer
(514) 282-7073, ext. 320