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The Dialog Corporation (LSE: DLG, NASDAQ:DIAL), a leading provider of Internet-based information, technology and e-commerce solutions, today
announced the proposed refinancing and restructuring of the Group through the sale of its Information Services Division (ISD) to The Thomson Corporation [TSE: TOC] which will enable the repayment of all the Group’s
outstanding senior and high yield debt. Separately, Dialog reported financial results for the year ended 31 December, 1999.
The overall effect of these proposals is to reposition the Group - which will be renamed Bright Station plc (http://www.brightstation.com) – to
focus on its eCommerce and Web Solutions businesses, with an additional £27.9 ($44) million of new equity investment. These divisions can now be developed to their full potential. The Board is also proposing
the creation of an investment business that will focus on developing promising Internet and eCommerce start-ups, leveraging the Company’s leading edge technologies, management experience and new capital.
The following is a summary of the details of the agreements and proposed actions:
- - The sale of the Information Services Division (ISD) for $275 million in cash to The Thomson Corporation.
- - The formation of a strategic alliance with The Thomson Corporation consisting of:
- An equity investment of £15.9 ($25) million in Bright Station plc
- Licensing agreements for Bright Station’s technologies and software
- The provision of content reseller rights to Bright Station
- - The consideration for the sale will be used to settle the Group’s outstanding high yield and senior debt obligations in full.
- - A £12 ($19) million equity investment in Bright Station by JIYU Holdings, a company involved in numerous global high technology businesses.
- - Bright Station will retain all of Dialog’s eCommerce (ECD) and Web Solutions (WSD) technology assets and brands – including InfoSort®,
Muscat®, WebTop®, WebCheck®, Sparza®, OfficeShopper® and the Knowledge Management business.
- - Combined WSD and ECD revenues, which will form the core of Bright Station assuming shareholder and bondholder approval of the pending ISD
sale to Thomson, rose significantly to £9.3 million in 1999, compared to £4.1 million in 1998.
- - The creation of a new Internet Ventures Division (IVD) offering a unique combination of the Company’s technologies, management expertise and
capital to support new Internet and eCommerce start-ups.
- - The appointment of entrepreneur and Internet venture capitalist Matthew Freud (Oxygen Holdings) to the investment panel of the Bright Station
IVD, and Dialog/Bright Station Chief Executive Dan Wagner will be appointed to the investment panel of Oxygen Holdings. - Proposals are subject to shareholder and bondholder approval.
Allen Thomas, Chairman of The Dialog Corporation, stated: “The Company has many exciting opportunities across all of its divisions, which we have
largely been unable to capitalise upon due to Dialog’s highly leveraged capital structure, dating back to the Knight-Ridder Information acquisition.
After months of in depth review and discussions with multiple parties, the Board is pleased to present an exciting plan to resolve the Group’s capital constraints while also positioning the Company, with a strong capital footing, to pursue a range of attractive high growth opportunities rooted in the Group’s broad base of technology, service and personnel assets.
Bright Station’s experienced and entrepreneurial executive team will now be able to focus their energies on building our fast-growing Web Solutions
(WSD) and eCommerce divisions (ECD). This will enable the Company to capitalise on our cutting-edge portfolio of technologies and services in order to pursue the myriad market opportunities afforded by the digital
economy and leveraging the added value that will come from the new Internet Ventures Division (IVD).
We will pursue a strategy of value creation that will involve seeking independent public listings and/or strategic alliances for the various business units at the appropriate stage in their respective development.
Further, by aligning the new Group with an alliance with Thomson, one of the world’s information industry leaders, Bright Station will be provided
with a range of financial, strategic and operational benefits.
In summary, after a full and thorough examination of the opportunities available to the Company over the last year, the Board is confident that
these proposals represent the best possible way forward for the Group and are in the best long-term interests of our shareholders, customers and employees.”
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