eServGlobal Limited MasterCard, eServGlobal, BICS create remittance JV (9261V)

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RNS Number : 9261V

eServGlobal Limited

18 December 2013

Press Release

MasterCard, eServGlobal and BICS Create Remittance Joint Venture

HomeSend JV to Expand Options for Consumers to Send and Receive Money Worldwide

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#MasterCard, #eServGlobal and #BICS

PURCHASE, NY, December 18, 2013 - MasterCard (NYSE: MA), eServGlobal (LSE: ESG.L, ASX: ESV.AX) and BICS today announced the formation of HomeSend, a joint venture (JV) which will enable consumers to send money to and from mobile money accounts, payment cards, bank accounts or cash outlets - regardless of their location or that of the recipient.

The HomeSend JV will leverage the current HomeSend platform, a remittance hub based on eServGlobal technology and developed as part of a strategic partnership between eServGlobal and BICS. The HomeSend platform was first to market in offering international mobile remittances. Today, HomeSend has live deployments in 50 countries and commercial contracts with mobile network operators (MNOs) and money transfer operators (MTOs) that represent more than 1.2 billion subscribers - the equivalent of one in seven of the world's population - and 200,000 cash agents respectively.

By connecting the worldwide community of telecom partners and MTOs to the more than 24,000 financial institutions on the MasterCard network, the HomeSend JV will provide consumers new options and flexibility for sending or receiving funds and enable cross border remittance payments worldwide. For people in developing markets, the receipt of funds from friends and family is an important lifeline. Based on World Bank estimates, remittances to developing countries will reach around $515B by 2015.

"HomeSend will provide an important platform to deliver improved remittance services, and bring person-to-person transfer capabilities to more financially underserved consumers around the globe," stated Ed McLaughlin, Chief Emerging Payments Officer at MasterCard. "MasterCard, eServGlobal and BICS each brings its own unique contribution to the newly formed entity. Collectively, we have an opportunity to improve people's lives."

"This is a significant development for the global money transfer industry and we are delighted to be part of this new venture," said Paolo Montessori, CEO and Managing Director of eServGlobal. "This combination creates one of the most comprehensive offerings in the market, and we believe will be an important step in the journey to extending cost-effective and easy-to-use financial services to people worldwide."

"We are very happy to be part of this significant milestone for the mobile financial services industry, and believe this type of service can open up new remittance corridors and expand the scope of money transfers around the world," added Daniel Kurgan, CEO of BICS.

MasterCard will own a controlling share of the HomeSend JV.

About MasterCard

MasterCard (NYSE: MA), www.mastercard.com, is a technology company in the global payments industry. We operate the world's fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard's products and solutions make everyday commerce activities - such as shopping, traveling, running a business and managing finances - easier, more secure and more efficient for everyone. Follow us on Twitter @MasterCardNews, join the discussion on the Cashless Pioneers Blog and subscribe for the latest news on the Engagement Bureau.

About eServGlobal

eServGlobal (LSE: ESG, ASX: ESV) offers mobile money solutions which put feature-rich mobile financial services at the fingertips of users worldwide, covering the full spectrum of mobile wallet, mobile commerce, recharge and agent management features. eServGlobal invests heavily in product development, using carrier-grade, next-generation technology and aligning with the requirements of more than 100 customers in over 65 countries. eServGlobal also offers a comprehensive suite of sophisticated, revenue generating Value-Added Services to engage subscribers in a dynamic manner. These services can be seamlessly integrated with our mobile money portfolio to extend loyalty and promotion offers. eServGlobal has been a source of innovative solutions for mobile and financial service providers for 30 years. Follow us on Twitter @eServGlobal.

About BICS

BICS delivers best-in-class international wholesale solutions to any communication service provider worldwide. Through its Mosaic portfolio, a comprehensive, flexible and innovative suite of solutions designed to be used individually, or collectively, BICS meets the existing and future requirements of the global telecoms industry.

BICS' headquarters is located in Brussels with regional offices in Bern, Dubai, New York and Singapore. We have also local representation in Accra, Beijing, Cape Town, Miami, Montevideo and Nairobi. Our team continuously strives to provide our customers with the highest levels of quality, reliability and interoperability enabling them to maximise their end-user value.

With our successful consolidation strategy, and a continuing focus on technological advancement and innovation, we have achieved a world-leading position in the international Voice and Mobile Data markets.

Media Contact:

Brian Gendron, 914-249-1284, [e-mail]

Investor Relations Contacts:

MasterCard: Barbara Gasper, 914-249-4565, [e-mail]

eServGlobal: Alison Cheek, [phone], [e-mail]

# # #

Annexure

 
 Transaction Summary    Under the terms of the agreement, eServGlobal and 
                         BICS will each contribute or make available all 
                         of their assets, including staff, that are directly 
                         related to the existing HomeSend business to a 
                         newly formed company ("NewCo"). 
                         In consideration for the transfer of assets, eServGlobal 
                         will receive EUR9m in cash (EUR3.45m subject to 
                         escrow for 2 years). MasterCard will contribute 
                         additional capital to NewCo to meet the estimated 
                         working capital requirements of NewCo for the medium 
                         term. 
                         Following the transaction, MasterCard will own 
                         55% of NewCo, eServGlobal will own 35% and BICS 
                         will own 10%. Based on the initial shareholdings, 
                         MasterCard will be entitled to appoint three directors 
                         to the Board of NewCo, eServGlobal will be entitled 
                         to make two appointments and BICS will be entitled 
                         to appoint one director. 
                         In addition, MasterCard will enter into a commercial 
                         agreement with HomeSend which will have an initial 
                         duration of three years and automatic yearly renewal 
                         thereafter. The commercial agreement will require 
                         MasterCard to use its best endeavors to promote 
                         the HomeSend service utilising MasterCard's sales 
                         channels. 
---------------------  ---------------------------------------------------------- 
 Financial Impact       The payment to be received by eServGlobal will 
                         provide additional working capital for its core 
                         mobile money business and the core business will, 
                         following completion of the transaction, see an 
                         immediate positive cash flow impact as HomeSend 
                         operations (estimated at EUR1.0M (AUD$1.5M) being 
                         the direct costs of eServGlobal staff transferring 
                         to NewCo) are transferred to NewCo. 
                         There will be a positive movement in the net assets 
                         of eServGlobal of approximately EUR24.9M (AUD$37.6M) 
                         on creation of the HomeSend JV as the disposal 
                         of the HomeSend intellectual property and associated 
                         goodwill (approximately EUR5.1M (AUD$7.7M) as at 
                         31st October 2013) will be more than offset by 
                         the value of eServGlobal's interest in the HomeSend 
                         JV. 
                         As a result of the transfer of assets to the HomeSend 
                         JV, eServGlobal will recognise a gain on disposal 
                         of between EUR23.5M - EUR24.2M in FY2014 (consideration 
                         of EUR30.0M less assets classified as held for 
                         sale of EUR5.1M and estimated selling expenses). 
---------------------  ---------------------------------------------------------- 
 Conditions Precedent   Completion of the transaction is subject to the 
                         satisfaction of certain conditions precedent including 
                         merger clearances, certain third party consents 
                         and transfer of relevant employees to NewCo and 
                         standard pre-closing conditions in relation to 
                         breach of warranties and material adverse change. 
                         eServGlobal does not consider the transaction to 
                         be one to which ASX Listing Rule 11.1 applies and 
                         does not intend to obtain shareholder approval 
                         for the transaction. 
---------------------  ---------------------------------------------------------- 
 Law                    NewCo will be incorporated in Belgium and the JV 
                         agreements shall be subject to Belgian law. 
---------------------  ---------------------------------------------------------- 
 
 
 Warranties and    eServGlobal has provided warranties and indemnities 
  Indemnities       in relation to, inter alia, its HomeSend intellectual 
                    property and the assets to be transferred. The 
                    majority of warranties are limited to EUR4.6M (the 
                    total amount held in escrow on account of eServGlobal 
                    and BICS) plus, in respect to some specific warranties 
                    which include the intellectual property warranties, 
                    an additional EUR2M. The warranty period aligns 
                    with general periods of limitation of claims. 
----------------  --------------------------------------------------------- 
 Other Key terms   MasterCard may acquire eServGlobal's interest in 
                    the HomeSend JV at fair market value if there is 
                    a change of control of eServGlobal. For these purposes 
                    change of control includes a person (acting alone 
                    or with another person) acquiring 30% or more of 
                    the voting power in the ultimate parent company 
                    of eServGlobal or the right to appoint the majority 
                    of its directors. 
                    With limited exceptions in relation to MasterCard, 
                    no NewCo shareholder may engage in activity with 
                    a remittance hub service similar to HomeSend. 
                    MasterCard may drag along eServGlobal if MasterCard 
                    is selling all its shares in NewCo to a bona fide 
                    third party arm's length purchaser. eServGlobal 
                    can tag along pro rata if MasterCard takes its 
                    interest in NewCo below 25%. 
                    Management of the HomeSend JV is generally reserved 
                    to the Board and the CEO appointed by the NewCo 
                    Board. eServGlobal has veto rights over some management 
                    matters which, if exercised, then require approval 
                    of the holders of two thirds of the NewCo shares. 
                    BICS also has veto rights requiring unanimous approval. 
                    MasterCard may override eSG triggered deadlocks 
                    after the first 18 months by acquiring the minority 
                    shareholdings at fair market value. MasterCard 
                    cannot override deadlocks relating to agreements 
                    between NewCo and MasterCard that grant MasterCard 
                    rights to NewCo's intellectual property assets. 
                    Distributions to NewCo shareholders are at the 
                    discretion of the holders of two thirds of the 
                    NewCo shares. eServGlobal does not anticipate any 
                    distributions in the short term. 
----------------  --------------------------------------------------------- 
 

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