Strategic advisor appointed to enhance and realise portfolio company valuations
28 June 2007
XL TechGroup (AIM: XLT), the systematic architect and builder of an ongoing stream of high value new companies, is pleased to announce that Presidential Strategic Advisory Services LLC (“PSAS”), a US based company controlled by David Epstein and Richard Mondre, has acquired 2 million new XL TechGroup shares, representing 3.89% of the enlarged issued capital.
XL TechGroup and PSAS have agreed to this acquisition in connection with the latter's appointment as a strategic advisor to the Company, with a specific mandate to enhance and accelerate liquidity in XL TechGroup's portfolio companies and ultimately to convert the significant current and future value in XL TechGroup's portfolio companies into cash. It is part of XL TechGroup's continuing strategy to create an ongoing series of significant cash distributions for its shareholders, and it is anticipated that the first of these will occur during 2008.
David Epstein and Richard Mondre have considerable experience in managing public share value and in corporate merger activity, divestitures and trade sales, as well as corporate strategy. They were respectively CEO and general counsel of Precision Response Corporation (“PRC”), a US based multinational customer care solutions provider which has had as many as 13,000 employees. PRC listed on NASDAQ in July 1996, raising US$67 million, which was followed by a very successful US$166 million secondary offering only six months later. In 2000, Messrs. Epstein and Mondre led PRC through a merger with IAC (InterActiveCorp), formerly USA Networks, a Fortune 500 integrated media company led by Barry Diller. This merger valued PRC at approximately US$700 million, less than four years after PRC's IPO.
Messrs. Epstein and Mondre have invested and / or initiated strategies to enhance or crystallise value for a range of entrepreneurial companies, across a number of sectors that include media, biotechnology and oil recycling. Messrs. Epstein and Mondre have also advised on the development strategies of Scout Media Inc, leading up to its sale in 2005 to Fox Interactive Media, part of News Corporation, and have advised on successful diversification and restructuring strategies of the Mustad Group, a privately held 175 year old Norway based group that has engineering, oil recycling and other business interests in Europe, the Americas and Asia.
David Epstein and Richard Mondre will add their own abilities in liquidity and value enhancement and crystallisation to XL TechGroup's proven value creation skills. Working with the XL TechGroup executive team, and using their strong familiarity with US markets in particular, they are expected to make a significant contribution in monetising the targeted minimum valuations of US$400 million for each XL TechGroup portfolio company within four years of their creation.
Richard Mondre of PSAS said: “XL TechGroup's focus on creating significant value by selectively addressing large scale unmet market needs is a business model that we fully endorse. Furthermore, we are very impressed with the management team's track record. We believe that the latent value within XL TechGroup's portfolio of companies and its pipeline of opportunities is both significant and as yet unappreciated, a combination that is very attractive to us as advisors and investors. We look forward to working with the XL TechGroup team to unlock this value for the benefit of all shareholders.”
PSAS has purchased 2 million new ordinary XL TechGroup shares at 178p per share, being the average of the Company's closing share price over a 30 day trading period immediately prior to issuing the new shares. Following this purchase by PSAS, there are a total of 51,404,993 XL TechGroup shares in issue, with PSAS owning 3.89% of the enlarged total. The shares now held by PSAS are the subject of both hard and soft lock-ins over a two year period, and are also pledged to XL TechGroup as security against a promissory note equivalent to the total purchase price of the shares issued to PSAS. The note accrues interest semi-annually at 4.59% per annum which is the current United States Treasury five-year Applicable Federal Rate, and can be called by XL TechGroup at anytime after the first year under certain circumstances. The new shares rank pari passu with the existing ordinary shares in issue and application will be made to the London Stock Exchange for the new shares to be admitted to trading on AIM.
John Scott, CEO of XL TechGroup, said: “We are delighted that David and Richard have agreed to be part of XL TechGroup's extended executive team. XL TechGroup has a strong track record in creating exciting new companies with major, global market potential and taking them through to a point where they have significant but still growing valuations. David and Richard have considerable experience in turning the latent value of a growing, entrepreneurial business into hard cash, and we are very excited about combining their skills with ours. Their interests are aligned with ours through the share purchase and, we look forward to a long-term, mutually beneficial relationship on the road to significant cash distributions to our shareholders in the future, starting in 2008.”
For further information:
| XL TechGroup Inc. | |
| John Scott / Harold Gubnitsky | Tel: +1 321 409 7403 |
| hgubnitsky@xltg.com | |
| Chris Munden, Director of Investor Relations | Tel: +44 (0) 20 7398 7720 |
| cmunden@xltg.com | |
| Nomura Code Securities | |
| Richard Potts, Corporate Finance | Tel: +44 (0) 20 7776 1200 |
XL TechGroup media enquiries:
| Abchurch Communications | |
| Heather Salmond / Gareth Mead | Tel: +44 (0) 20 7398 7700 |
| heather.salmond@abchurch-group.com |
Notes to Editors
About XL TechGroup
XL TechGroup is in the business of significant value creation. Working with major international corporate and technology partners such as AES, Procter & Gamble and leading universities, XL TechGroup first identifies global unmet market needs and then targets and exploits these by the systematic creation of successful, disruptive technology businesses. These are built from scratch, and are then funded and developed by XL TechGroup through to the point of a trade sale or a stock market listing.
XL TechGroup's unique and proven methodology selects the best opportunities in order to create one-to-two new companies annually, where each company is expected to achieve a valuation of at least US$400 million within four years from its creation. While an XL TechGroup company might perform a stock market listing at an earlier point in this four year timeframe, XL TechGroup would retain its controlling interest and would continue to assist with the company's development.
XL TechGroup's companies to date are: AgCert International plc (www.agcert.com), TyraTech Inc. (www.tyratech.com), DxTech LLC (www.dxtech.com), PetroAlgae LLC (www.petroalgae.com) and QuoNova LLC (www.quonova.com).
XL TechGroup has also established GenXL LLC as a joint venture to capture the value of those prospects that do not quite meet the US$400 million, four year criteria but still demonstrate considerable potential worth. Over and above XL TechGroup's core business model, GenXL will review a significant flow of opportunities from both XL TechGroup and GEN3 in order to generate new companies, standalone product lines and technology licensing opportunities or an appropriate mix of these.
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