SeaChange International, Inc.
(OTC: SEAC)
(“SeaChange” or the “Company”), a leading provider of video
delivery, advertising, streaming platforms, and emerging Free
Ad-Supported Streaming TV services (FAST) development, has entered
into an asset purchase agreement (the “Enghouse Purchase
Agreement”) under which an affiliate of Enghouse Systems Limited
(“Enghouse”), a leading global telecommunication technology and
solutions company that provides next generation communications
solutions to communication service providers (including TV / cable
operators), media companies, defense, public safety agencies, and
utilities, will acquire substantially all of SeaChange’s assets
related to its product and services business (the “Enghouse Asset
Sale”), and will assume certain liabilities, for a total purchase
price of $39 million, less SeaChange’s cash and cash equivalents at
closing (“Closing”). The Company currently expects the transaction
will result in net proceeds to SeaChange of between $21 to $23
million upon Closing.
The Enghouse Asset Sale, which has been approved
by SeaChange’s Board of Directors (the “Board”), is subject to
various terms and closing conditions, including approval by a
majority of the shares of SeaChange’s outstanding common stock.
Subject to such closing conditions, Closing is expected to occur in
early May 2024.
“When we set out to identify a strategic partner
for SeaChange, our two key goals were to maximize stockholder value
and to find a larger home for the SeaChange assets within which the
business could scale. With Enghouse’s commitment to SeaChange and
their customer-centric vision for the business, both goals are met.
Enghouse has a remarkable track record of embedding software
businesses into their highly efficient operational framework, and
we are looking forward to seeing SeaChange thrive within the
Enghouse family,” said Chris Klimmer, CEO at SeaChange.
Similar to the Partner One Transaction (as
defined and discussed below), following Closing, the Company will
retain its cash and cash equivalents, and U.S. and state net
operating loss carryforwards (“NOLs”), which may be available to
offset future tax income. The Enghouse Purchase Agreement also
contains a termination fee payable to Enghouse in connection with
the termination of the Enghouse Purchase Agreement under certain
circumstances, such as consummation of an alternative acquisition
transaction in connection with a Superior Proposal (as defined in
the Enghouse Purchase Agreement). However, the termination fee in
the Enghouse Purchase Agreement is $1.3 million.
In addition, similar to the Partner One
Transaction, concurrently with the execution of the Enghouse
Purchase Agreement, a significant stockholder (the “Significant
Stockholder”) of the Company, that cumulatively owns approximately
30.5% of the shares of SeaChange’s outstanding common stock, has
entered into a voting agreement with Enghouse pursuant to which the
Significant Stockholder has agreed, subject to the terms and
conditions therein, to vote its shares of common stock of the
Company to approve the Enghouse Asset Sale at the SeaChange special
meeting of stockholders (the “Special Meeting”).
Termination of the Partner One Acquisition
As previously announced on March 11, April 10
and April 18, 2024, SeaChange had entered into similar agreements,
as amended (the “Partner One Agreements”), with an affiliate of
Partner One, which would acquire substantially all of SeaChange’s
assets related to its product and services business, and would
assume certain liabilities, for a total purchase price of
$34,001,000, less SeaChange’s cash and cash equivalents at closing
(the “Partner One Transaction”).
The Company received an acquisition proposal
from Enghouse, which the Board, in consultation with the Company’s
independent financial and legal advisors, determined in good faith
was a Superior Proposal (as defined in the Partner One Agreements)
compared to the Partner One Transaction. Pursuant to the Partner
One Agreements, Partner One was given three days’ prior written
notice of the Board’s intention to change its recommendation and/or
have the Company terminate the Partner One Agreements, allowing
Partner One the opportunity, if it desired, to make such
adjustments in the terms and conditions of the Partner One
Agreements, so that the new acquisition proposal ceased to
constitute a Superior Proposal.
Partner One notified SeaChange that Partner
One’s acquisition proposal in the Partner One Agreements was its
best and final offer and that Partner One would not be making
adjustments in the terms and conditions of the Partner One
Agreements. Therefore, SeaChange has exercised its right to
terminate the Partner One Agreements on April 23, 2024, and the
termination is effective immediately. Pursuant to the Partner One
Agreements, SeaChange will pay a $1.0 million termination fee to
Partner One in connection with the termination of the Partner One
Agreements upon Closing.
SeaChange Special Meeting of Stockholders and
Proxy Supplement
The Special Meeting was called to order on April
22, 2024, at 10:00 a.m., Eastern Time, and adjourned to provide
SeaChange’s stockholders adequate time to digest supplement
disclosures and the ability to reevaluate previously casts, if
applicable (after previously being similarly adjourned on April 17,
2024). The Board intends to reconvene the Special Meeting on April
26, 2024, at 9:30 a.m., Eastern Time at
www.virtualshareholdermeeting.com/SEAC2024SM to consider, among
other things, a proposal to approve the Enghouse Asset Sale
pursuant to the Enghouse Asset Purchase Agreement. The record date
for the Special Meeting remains March 18, 2024.
On or about March 22, 2024, SeaChange mailed a
proxy statement (the “Original Proxy Statement”) to consider and
vote on proposals relating to the proposed Partner One Transaction.
SeaChange posted on www.proxyvote.com (i) on or about April 11,
2024, a proxy supplement (“Proxy Supplement No.1”) regarding
certain amended terms of the Partner One transaction and (ii) on or
about April 18, 2024, a proxy supplement (“Proxy Supplement No.2”)
regarding certain further amended terms of the Partner One
transaction. Due to the termination of the Partner One Transaction
and the execution of the Enghouse Asset Purchase Agreement,
SeaChange intends to post a new proxy supplement (“Proxy Supplement
No.3” and, together with the Original Proxy Statement, Proxy
Supplement No.1, Proxy Supplement No.2, the “Proxy Statement
Materials”) on www.proxyvote.com on or about April 24, 2024 to all
SeaChange stockholders entitled to vote at the Special Meeting
regarding certain material details of the Enghouse Asset Sale that
differ from the Partner One Transaction. Please carefully read the
Proxy Statement Materials, along with the exhibits attached
thereto, but please note that applicable SeaChange stockholders
should use the proxy card that was previously sent to them with the
Original Proxy Statement. Also, SeaChange stockholders should
please note that Proposal No.1 on the proxy card now refers to the
Enghouse Asset Sale. If SeaChange stockholders have already
delivered a properly executed proxy and do not wish to change their
vote, they do not need to do anything.
Needham & Company, LLC is acting as
exclusive financial advisor to SeaChange in this transaction, and
K&L Gates LLP is acting as legal counsel to SeaChange in this
transaction.
About SeaChange International,
Inc.SeaChange International, Inc. (OTC: SEAC) provides
first-class video streaming, linear TV, and video advertising
technology for operators, content owners, and broadcasters
globally. SeaChange technology enables operators, broadcasters, and
content owners to cost- effectively launch and grow premium linear
TV and direct-to-consumer streaming services to manage, curate, and
monetize their content. SeaChange helps protect existing and
develop new and incremental advertising revenues for traditional
linear TV and streaming services with its unique advertising
technology. SeaChange enjoys a rich heritage of nearly three
decades of delivering premium video software solutions to its
global customer base.
About EnghouseEnghouse Systems
Ltd. is a Canadian publicly traded company (TSX: ENGH) that
provides vertically focused enterprise software solutions focusing
on contact centers, video communications, healthcare,
telecommunications, public safety and the transit market. Enghouse
has a two-pronged growth strategy that focuses on internal growth
and acquisitions, which are funded through operating cash flows.
The company has no external debt financing and is organized around
two business segments: the Interactive Management Group and the
Asset Management Group. For more information, please visit
www.enghouse.com.
Forward-Looking StatementsThis
press release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
In general, forward-looking statements usually may be identified
through use of words such as “may,” “believe,” “expect,”
“anticipate,” “intend,” “will,” “should,” “plan,” “estimate,”
“predict,” “continue”, and “potential,” or the negative of these
terms, or other comparable terminology, and include statements
related the amount of net proceeds SeaChange receives from the
transaction, the timing and logistics of reconvening the Special
Meeting, the timing of the posting of Proxy Supplement No.3 on
www.proxyvote.com, the ability and timing to close the Enghouse
Asset Sale, post-transaction success, and NOLs availability to
offset SeaChange’s tax income in the future. Forward-looking
statements are not historical facts and represent management’s
beliefs, based upon information available at the time the
statements are made, with regard to the matters addressed; they are
not guarantees of future performance. Actual results may prove to
be materially different from the results expressed or implied by
the forward-looking statements. Forward-looking statements are
subject to numerous assumptions, risks, and uncertainties that
change over time that could cause actual results to differ
materially from those expressed in or implied by such statements.
Many of the factors that could cause actual results to differ
materially from those expressed in or implied by forward-looking
statements are beyond the ability of the Company or Enghouse to
control or predict. Stockholders and investors should not place
undue reliance on any forward-looking statements. Any
forward-looking statements speak only as of the date of this press
release, and neither SeaChange nor Enghouse undertakes any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events, or
otherwise, except as required by law.
Contact:SeaChange International
1.978.897.0100info@schange.com
Source: SeaChange International, Inc.
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