Business
Pulse Data Inc. rejects Quantum Yield offer
Pulse Data Inc. rejects Quantum Yield offer.
About this update from Pulse Seismic Inc.
[{"type":"text","content":"\n\n\n\nTSX: PSD\n\n\nCALGARY, June 25 /CNW/ - The Board of Directors of Pulse Data Inc.\n("Pulse" or the "Company") has reviewed and considered the offer of Quantum\nYield Inc. ("Quantum") dated June 19, 2007 to acquire all of the common shares\nof Pulse in exchange for one debenture of Quantum with a principal amount of\n$3.05 and a nominal 10 percent interest rate per common share of Pulse.\n\n\nThe Board of Directors of Pulse unanimously recommends that shareholders\nreject the offer and not tender their shares of Pulse to the offer. In the\nopinion of the Board, the value of the offer is significantly below the value\nof Pulse's shares.\n\n\nIn addition, Pulse announces that it is making an application to the\nAlberta Securities Commission (ASC) for an order to cease-trade the offer due\nto incomplete and misleading disclosure to Pulse shareholders. In the opinion\nof the Pulse Board of Directors, Pulse shareholders should, at a minimum,\ndelay making a decision in respect of the offer until after the hearing.\n\n\nREASONS FOR REJECTING THE OFFER:\n\nImportant reasons for rejecting the offer are as follows:\n\n- The offer is a 100 percent leveraged buy-out, by an issuer and\n management with no material assets, no discernible positive credit\n history and no track record in the seismic business, using Pulse's own\n assets as security and with Pulse shareholders providing "100 percent\n vendor take-back financing." Pulse shareholders would continue to have\n all of the risks of the ongoing business with no influence over\n Company operations, while Quantum would gain exposure to all of the\n upside.\n\n- Quantum's statements that the offer represents a premium to the\n trading price of the Pulse shares has no foundation. No calculable\n premium is being offered, because there is no market for the\n debentures in order to assess their price. Quantum's statements that\n the debentures represent a premium to Pulse's book value are\n irrelevant and misleading.\n\n- Pulse currently has approximately $36 million outstanding in a secured\n term loan. Under the term loan agreement, a change of control of Pulse\n without the lender's prior consent is an event of default which\n entitles the lender to accelerate the debt, demand repayment and\n realize upon their security. It is unknown what the...