15:20:42 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Apivio Systems Inc
Symbol APV
Shares Issued 52,843,525
Close 2017-01-16 C$ 0.265
Market Cap C$ 14,003,534
Recent Sedar Documents

Apivio receives $22M takeover bid from Nuri Telecom

2017-01-17 11:29 ET - News Release

Mr. Song Man Cho of Nuri Telecom reports

NURI TELECOM COMPANY LIMITED COMMENCES ALL CASH OFFER FOR ALL OF THE COMMON SHARES OF APIVIO SYSTEMS INC.

Nuri Telecom Company Ltd.'s wholly owned subsidiary, 1101324 B.C. Ltd., has commenced an all-cash offer to the shareholders of Apivio Systems Inc. to acquire all of the issued and outstanding common shares of Apivio.

A significant premium and certainty of liquidity

The offeror is offering 40 cents in cash for each common share, which represents a 51-per-cent premium based on the closing price of the common shares on the TSX Venture Exchange on Jan. 16, 2017 (the last trading day prior to the public announcement by Nuri of its proposal to the shareholders to acquire Apivio). The offer also represents a premium of 49 per cent to the volume-weighted average trading price of the common shares on the TSX-V over the 30 trading days ended on Jan. 16, 2017.

Chairman and chief executive officer of Nuri, Song Man Cho, stated: "The offer represents a compelling opportunity for shareholders to realize certain value for their common shares at an attractive premium. We urge shareholders to consider the offer and tender their common shares.

"Nuri is a publicly traded company listed on the KOSDAQ in Korea with a market capitalization of approximately $127.8-million as at Jan. 16, 2017. The offer is not subject to any financing conditions, and Nuri will fund the offer from available cash resources."

Benefits of the offer

Nuri encourages shareholders to consider the following factors, among others, when making the decision to accept the offer.

  • Significant premium to market price -- the offer represents a significant premium of over 51 per cent based on the closing price of the common shares on the TSX-V on Jan. 16, 2017. The offer also represents a significant premium of 49 per cent to the volume-weighted average trading price of the common shares on the TSX-V over the 30 trading days ended on Jan. 16, 2017;
  • Fair value for Apivio -- the offer price of 40 cents in cash for each common share represents a premium value that fairly reflects the composition and performance of Apivio's portfolio of assets. The offer price indicates an enterprise value of approximately $22-million for Apivio, which implies a price earnings ratio of approximately 42 times to Apivio's earnings per share of one cent, as well as approximately 13 times to Apivio's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), based on Apivio's most recent publicly filed financial information;
  • Realize significant value -- the all-cash consideration provides shareholders with the opportunity to realize significant and certain value for their common shares. The offeror believes the immediate value is even more attractive when viewed against the risks inherent in any long-term business plan of Apivio, particularly given its recent stock performance. The Apivio board and management team have presided over a share-price decline of approximately 39.08 per cent over the one year prior to Jan. 16, 2017, representing a loss of approximately $8.98-million in equity value from its highest point on Feb. 3, 2016;
  • Liquidity -- shareholders currently have limited liquidity based on the trading history of the common shares. The aggregate total trading volume for the entire year ended on Dec. 30, 2016, is only 14,538,337 common shares, representing less than 28 per cent of the number of issued and outstanding common shares. The offer provides 100-per-cent cash consideration at a significant premium for the common shares, giving shareholders certainty of value and immediate liquidity, with the added benefit of the opportunity to sell their common shares free of broker commissions and fees for those who deposit their common shares directly with the information agent and depositary;
  • Fully financed cash offer -- the offer is not subject to a financing condition. The offeror will finance the entire offer from available cash resources;
  • Low likelihood of a competing offer -- the offeror believes that Apivio is unlikely to receive a competing offer at a premium to the price being offered by the offeror;
  • Avoid uncertainty of continued investment in Apivio -- Apivio faces significant challenges that represent a substantial risk for shareholders going forward, including:
    • Apivio dependent on Moimstone -- Apivio's financial health is dependent on its wholly owned Korean subsidiary, Moimstone, which represents approximately 95 per cent of Apivio's overall revenues for the 2014 and 2015 fiscal years. Apivio's performance in North America, independent of Moimstone, has been flat, with its major sales to date consisting of a $2.6-million contract for the UT880 Monet series VoIP phone and a $200,000 contract for the Wi-Fi Liberty series, Liberty L1 product in 2015. To put these numbers in perspective, Apivio spent roughly the equivalent amount in North America on research and development and marketing expenses;
    • Moimstone faces stagnating market in Korea -- while Apivio depends on Moimstone for the bulk of its revenues, Moimstone's own future growth prospects face significant headwinds and appear limited. Moimstone operates in the relatively mature market of Korea's VoIP telephony industry, where it already enjoys a 95-per-cent market share. In this context, the offeror and Nuri believe any further growth for Moimstone will necessarily involve significant market and execution risks;
    • Thin market for high-end products -- as a cornerstone of its business plans, Apivio's management team has devoted substantial resources to developing high-end products such as the UT880 Monet series VoIP phone for NEC America and the Wi-Fi Liberty series units for the North American market. However, the market for high-end products in the VoIP telephony market is relatively thin and can quickly saturate. The offeror and Nuri believe there are significant risks to the high-end product line strategy currently being pursued by Apivo's management team;
  • Potential for downward impact to common share price if offer not accepted -- the offer represents a significant premium to the market price of the common shares prior to the public announcement by the offeror of its offer to the shareholders to acquire Apivio. If the offer is not successful, and no other offer is made for Apivio, the offeror believes it is likely the common share price will decline significantly below the offer price.

Lock-up agreements

The offeror has also entered into lock-up agreements with various shareholders of Apivio, including the founder and former CEO of Moimstone, and former board member of Apivio, C.W. Lee. The total number of common shares subject to the lock-up agreements represents approximately 10.69 per cent of the issued and outstanding common shares. Under the lock-up agreements, each of the locked-up shareholders has agreed, subject to certain exceptions, to accept the offer by depositing the common shares presently owned or controlled by the locked-up shareholder in accordance with the terms and conditions of the offer.

Filing and mailing of offer and takeover bid circular

Nuri has filed the offer and takeover bid circular and related documents with the applicable Canadian securities regulatory authorities on SEDAR. The offeror is also mailing the offer documents to shareholders.

Full details of the offer are contained in the offer documents, and Nuri encourages shareholders to carefully review the offer documents and to consider the important information set out therein, including detailed instructions on how to tender their common shares to the offer. Copies of the offer documents may be retrieved on the website for the offer on Apivio's website or under Apivio's profile on SEDAR. Shareholders may also obtain copies of the offer documents free of charge upon request made to the offeror's information agent and depositary, Laurel Hill Advisory Group, at 1-877-452-7184 (North America toll-free), or by e-mail.

The offer will be open for acceptance until 11:59 p.m. ET on May 2, 2017, unless the offer is extended, accelerated or withdrawn by the offeror in accordance with its terms.

Shareholder questions

If you have any questions regarding the offer or require assistance with tendering your common shares, please call the information agent and depositary for the offer, Laurel Hill Advisory Group, toll-free in North America at 1-877-452-7184 (1-416-304-0211 outside North America), or by e-mail.

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