BALCATTA-BASED smart ticketing company ERG Group has announced an agreement with American Express Travel Related Services Company Inc (Amex) to purchase at a discount all amounts owing in respect of ERG’s purchase of Proton World in 2001.
In a statement released by the company, ERG currently has liabilities totalling $20.6 million to Amex, which will be extinguished in full for approximately $11.7 million, yielding a profit of $8.9 million in the current half.
As part of the settlement, which is due on December 21, ERG has agreed to release the Amex shareholding in ERG (1,484,165 shares) from escrow. These shares have been placed with financial institutions.
In addition, 700,000 options issued to Amex on April 22 2003 will be cancelled.
According to the statement the key terms of the settlement include: ERG’s liability to Amex is $20.6 million comprising – $1.0 million, representing the remaining cash instalment from the original Proton World acquisition, and $19.6 million, representing a deferred liability based on the ERG equity issued at the same time; Amex will accept $US10 million, less the amount received on disposal of its ERG shares, as full settlement of these liabilities. Based on the current $US exchange rate and ERG share price, the net amount payable by ERG is approximately $11.7 million; ERG will fund the settlement from existing cash reserves.
The transaction is due to settle on December 21 2003.