09/06/2008 - 10:05

Perth Gemcom directors net $14.6m

09/06/2008 - 10:05

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Perth-based directors of Gemcom Software International Inc, Tim Moore and Tony Packer, will pocket a combined $14.6 million from the sale of their interest in the company, after two US-based equity firms increased their takeover offer.

Perth-based directors of Gemcom Software International Inc, Tim Moore and Tony Packer, will pocket a combined $14.6 million from the sale of their interest in the company, after two US-based equity firms increased their takeover offer.

The joint US-based bidders, private equity firms JMI Equity and The Carlyle Group, have agreed to amend the friendly takeover agreement originally entered into last month, which will boost the cash offer from $C2.90 to $3.05 per share.

The increase in the offer now values the transaction at $C190 million ($A194m), up from $C180 million.

WA Business News understands that both Mr Moore and Mr Packer, who hold a combined 7.5 per cent in the company, will vote in favour of the takeover.

Mr Moore and Mr Packer had previously held a 54 per cent stake in Perth company Surpac Minex, which held major operations in the state, before it was acquired by Gemcom in 2006.

Both Mr Moore and Mr Packer declined to comment.

The increase in the takeover price stemmed from an agreement between the bidders and Gemcom's largest shareholder, investment company Pala Investments Holdings Ltd, which is believed to have snared a 19.05 per cent stake after the original bid was launched.

"Pala has agreed to become a shareholder in the purchaser [Carlyle and JMI], if Pala's review of Gemcom diligence materials is satisfactory to Pala," Gemcom said in a statement.

Pala, a $US2.1 billion resource investment house, has until June 16 to decide whether to invest in Carlyle and JMI.

If Pala proceeds with the investment, it is understood that Pala will hold a 25 per cent interest in Gemcom while Carlyle and JMI will each hold a 37.5 per cent stake.

Gemcom services clients in over 90 countries from 19 locations with its largest division operating in Australia, which is headquartered in Perth.

The full Gemcom announcement is pasted below:

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.

About JMI Equity
JMI Equity, based in Baltimore and San Diego, is a private equity firm exclusively focused on investments in growing software and business services companies at all stages of their lifecycles.
Founded in 1992, JMI has invested in more than 90 companies throughout North America and has approximately $1.3 billion of committed capital under management. JMI provides the first institutional capital to self-funded companies, partners with management teams to acquire or recapitalize market leading companies and selectively makes investments in early-stage companies. Representative investments include Blackbaud, DoubleClick, Kronos and Unica. For more information on JMI, visit www.jmiequity.com.

About The Carlyle Group
The Carlyle Group is a global private equity firm with $81.1 billion under management committed to 60 funds. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. Since 1987, the firm has invested $43.0 billion of equity in 774 transactions for a total purchase price of $229.3 billion. The Carlyle Group employs more than 1,000 people in 21 countries. In the aggregate, Carlyle portfolio companies have more than $87 billion in revenue and employ more than 286,000 people around the world.
www.carlyle.com

About Pala Investments Holdings Limited
Pala Investments Holdings Limited is a US$1.2 billion multi- strategy alternative investment company with a focus on mining and natural resource companies in both developed and emerging markets. Pala, which is based in Jersey, Channel Islands, seeks to assist companies in which it has long-term shareholdings by providing strategic advice and innovative financing solutions.
It is advised on an exclusive basis by Pala Investments AG, based in Switzerland.

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