Gemcom Software Announces Increase in Acquisition Purchase Price
Vancouver, Canada – June 8, 2008 – Gemcom Software International Inc. (TSX:GCM), the largest global supplier of specialised mining productivity solutions, (the “Company” or “Gemcom”) announced today that an acquisition vehicle controlled by JMI Equity and The Carlyle Group (the “Purchaser”) has agreed with Gemcom to amend the arrangement agreement the parties entered into on May 7, 2008 to increase the amount to be paid to shareholders to Cdn$3.05 per share from Cdn$2.90 per share. The total value of the transaction is now valued at approximately Cdn$190 million.
The purchase price increase was accomplished in connection with an agreement reached between the Purchaser and Pala Investment Holdings Limited (“Pala”), the Company’s largest shareholder. Pala has agreed to become a shareholder in the Purchaser, if Pala’s review of Gemcom diligence materials is satisfactory to Pala. Pala must decide whether to invest in the Purchaser by June 16, 2008. Pala currently holds 10,407,100 shares, representing 19.05% of all issued and outstanding shares. Pala has also agreed that as long as the arrangement agreement has not been terminated and the per share price to be paid to Gemcom”s shareholders is at least Cdn$3.05, Pala will vote all its shares in favour of the proposed transaction. The increased purchase price and the Pala voting agreement will remain in effect regardless of whether Pala invests in the Purchaser.
Burke Corbet, chairman of the Board of Directors said, “We are pleased to be able to announce this amended transaction which improves the result for our security holders. Gemcom’s Mergers & Acquisition Committee and Board of Directors unanimously recommend that security holders vote FOR this enhanced transaction at the upcoming special meeting. We are very pleased with the increased purchase price.”
In connection with the amended arrangement agreement, the Mergers & Acquisition Committee and the Board of Directors received a fairness opinion from the Catalyst Group LLC that the increased consideration to be received by security holders in connection with the amended transaction is fair, from a financial point of view, to such holders.
“Given Pala’s focus on the mining sector, Gemcom’s industry leading position in mining productivity solutions and experienced management team make it an excellent partner for us,” stated Jan Castro, managing director of Pala Investments AG. “We are excited to join JMI and Carlyle to work with Gemcom’s management team to implement a long-term growth strategy designed to meet the significantly increasing demands of the global mining industry for innovative technological solutions. Our involvement in other mining services companies will enable us to help position Gemcom for even greater success in this rapidly changing environment.”
The Gemcom special meeting of security holders to consider the proposed transaction will be held by July 22, 2008. The transaction will require the approval of 66 2/3% of the votes cast at the meeting in person or by proxy, and the approval of more than 50% of the votes cast by shareholders other than certain interested parties (including Pala) who vote at the meeting in person or by proxy. The record date for shareholders entitled to vote at the meeting remains May 30, 2008. Shareholders will be receiving a management information circular outlining the next steps and the voting process. Gemcom security holders are encouraged to read the circular in its entirety as it will provide, among other things, a detailed discussion of the process that led to the proposed transaction and the reasons behind Gemcom’s Board of Directors unanimous recommendation that shareholders vote FOR the transaction. Pending the receipt of court and security holder approval, the transaction is expected to be completed in late July. A copy of the amendment to the arrangement agreement and a copy of Pala’s voting agreement will be filed on SEDAR at www.sedar.com.
Lang Michener LLP is acting as legal advisor to the Mergers & Acquisition Committee of Gemcom’s Board of Directors and Fasken Martineau DuMoulin LLP is acting as legal counsel to Gemcom. Goodwin Procter LLP and Stikeman Elliott LLP are acting as legal advisors to JMI Equity, while Latham and Watkins LLP is acting as legal advisor to The Carlyle Group. Goodmans LLP is acting as legal advisor to Pala Investments Holdings Limited.
For more information contact:
Gemcom Investor Communications
Garth Albright, Chief Financial Officer
+1 604 684 6550
Gemcom Corporate Communications
Mark Bese, Marketing Communications Manager
+1 604 684 6550 ext. 4481
JMI Equity Communications
Chuck Dohrenwend, Senior Vice President
The Abernathy MacGregor Group
+1 212 371 5999
The Carlyle Group Communications
Ellen Gonda, Director of Communications for the Americas
+1 212 813 4821
Pala Investments Holdings Limited
Gregory Radke, Senior Vice President, Pala Investments AG
+41 41 5690 90 70