Update on Escrow Fund (4589L)
01 Agosto 2011 - 8:00AM
UK Regulatory
TIDMESG
RNS Number : 4589L
eServGlobal Limited
01 August 2011
eServGlobal Limited (eServGlobal or the "Company")
Update on Escrow Fund
1 August 2011
During 2010, eServGlobal Limited (ASX:ESV, AIM:ESG) sold its USP
business and assets to Oracle for AUD$106.7 million prior to
purchase price adjustments of AUD$3.6 million. As previously
advised to the market, the Company received an initial payment of
AUD$79.4 million with the balance AUD$23.6 million held in escrow
for a period of two years. 50% of the escrow amount is due to be
released after the first year (on or around 4 August 2011) and the
remainder to be released after the second year (on or around 4
August 2012), provided that funds are available following any
legitimate claims.
On Saturday 30 July 2011 eServGlobal received notification from
Oracle claiming that it has or anticipates incurring losses in
connection with three alleged joint customer billing issues and is
entitled to be indemnified by eServGlobal pursuant to the
transaction agreements in connection with these alleged losses.
Oracle has claimed against the escrow fund in connection with these
losses for the amount of AUD$11.5 million.
eServGlobal strongly disagrees with the claims made and
considers those claims largely unsubstantiated. The Company is
currently seeking legal advice. eServGlobal will lodge an objection
to the claims and intends to vigorously defend them. The Company
entered into a warranty and indemnity insurance policy in respect
of various provisions of the USP sale transaction documents and
intends to immediately investigate whether the alleged claims by
Oracle are covered by that policy. eServGlobal will keep the market
updated in relation to the claims and all other matters that are
impacted as a result of the claims.
Given the current circumstances, it is unlikely that the full
escrow amount originally due to be released at the end of the first
year following completion of the sale of the USP business (on or
around 4 August 2011) will be released until the claim is
resolved.
The Company has a strong net cash balance. Cash excluding escrow
exceeded AUD$60 million as of 30 June 2011. It continues to be the
Directors intention to return surplus cash to shareholders.
Following notification of the claim, the Company is reviewing the
appropriate distribution taking into consideration its financial
requirements.
The Company takes this opportunity to update the market on its
continued business progress. Over the past six months the Company's
HomeSend international remittance product has gained significant
momentum with the announcement of new geographic corridors
including Ghana, Vietnam, China, Nepal and the Philippines.
Importantly, this includes contracts with major multinational
operator groups, which is a strong endorsement of the competitive
strength of this innovative service. There have been significant
new wins in the Company's core business of Mobile Money and
Value-Added Services, notably with large partners such as Nokia
Siemens Networks.
The Company will be publishing a trading update at the end of
August ahead of its results announcement on 30 September.
About eServGlobal
eServGlobal specializes in Mobile Money solutions and
Value-Added Services (VAS), to help Telco Service Providers
increase their revenue and gain and maintain customer ownership.
eServGlobal invests heavily in product development, using
carrier-grade, next-generation technology aligned with the
requirements of more than 70 customers in over 45 countries.
With 13 offices globally, eServGlobal provides full "end-to-end"
and "any account to any account" Mobile Financial Services and
International Money Transfers. Our Value Added Services in
promotions, loyalty, messaging, and multiplay are focused around
the transaction and enable service providers to engage with the
subscriber in a personalized and dynamic manner.
To reduce time-to market and manage exposure to CAPEX, we now
offer multiple licensing alternatives, including SaaS-based
flexible, revenue-share pricing. eServGlobal is listed on the
Australian Securities Exchange (ESV) and the London Stock Exchange
AIM (ESG). More information at: www.eservglobal.com
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary T: +61 2 8280 7871
Info@eservglobal.com
Cenkos Securities plc www.cenkos.com
Ivonne Cantu/Stephen Keys (Nomad) T: +44 (0) 20 7397 8980
Threadneedle Communications www.threadneedlepr.co.uk
Caroline Evans--Jones/Josh Royston/Hilary T: +44 (0) 20 7653 9850
Millar
This information is provided by RNS
The company news service from the London Stock Exchange
END
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