Update on Escrow Fund (4589L)

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: [phone] 
  [e-mail] 
 Cenkos Securities plc                        www.cenkos.com 
  Ivonne Cantu/Stephen Keys (Nomad)            T: [phone] 
 Threadneedle Communications                  www.threadneedlepr.co.uk 
  Caroline Evans--Jones/Josh Royston/Hilary    T: [phone] 
  Millar 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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