ComnetiX Board Unanimously Approves Revised L-1 Offer and Rejects
Unsolicited Offer from BIO-key
OAKVILLE, ON, Jan. 26 /CNW/ - ComnetiX Inc. (TSX: CXI) today announced that ComnetiX and L-1 Identity Solutions, Inc. (NYSE: ID) have amended the terms of their previously-announced agreement, entered into on November 15, 2006, as amended on January 9, 2007, for L-1 to acquire all of the outstanding shares of ComnetiX.
Under the amended agreement, which was executed on January 25, 2007, L-1 will pay ComnetiX shareholders US$1.12 per share in cash for all of the issued and outstanding shares of ComnetiX, for a total purchase price of approximately US$17.0 million. The previous purchase price was US$1.05 per share. The revised purchase price has been expressed by L-1's as its "final" offer and reflects a premium of approximately 175% over the price of ComnetiX's shares prior to the initial announcement of L-1's offer in November 2006. The acquisition will remain structured as an arrangement under the Canada Business Corporations Act.
The Board of Directors of ComnetiX unanimously recommends that ComnetiX's shareholders and warrantholders vote FOR the special resolution approving the arrangement with L-1, as revised. The Board of Directors of ComnetiX has confirmed its unanimous approval of the revised arrangement and its determination that the revised arrangement is fair to, and in the best interests of, ComnetiX, its shareholders and warrantholders.
Concurrently with its unanimous approval of the L-1 offer, ComnetiX's Board of Directors unanimously rejected the unsolicited offer to purchase all of the outstanding shares of ComnetiX from BIO-key International, Inc., delivered to ComnetiX on January 19, 2007. ComnetiX's Board of Directors strongly advises ComnetiX shareholders not to deposit any common shares to the BIO-key offer, and if their shares have already been tendered to the BIO-key offer, to withdraw them immediately.
Among the reasons for the Board's unanimous rejection of the BIO-key offer are:
- a lack of liquidity of BIO-key's shares, - Bio-key's need for additional financing, and - dilution to ComnetiX shareholders.
ComnetiX has today issued a press release explaining in detail the unanimous rejection of the BIO-key offer by the ComnetiX Board of Directors. The Board of Directors will issue a Directors' Circular no later than January 31, 2007 that will contain important information for ComnetiX shareholders, including detailed reasons for the Board's unanimous rejection of the Bio-key offer.
Bernard Crotty, Chairman and CEO of Comnetix, stated: "Our board's unanimous endorsement of L-1's offer and rejection of the BIO-key offer is the result of thorough deliberations by the Board and extensive consultation with our advisors. We are convinced that L-1's US$1.12 all-cash offer is clearly superior to BIO-key's share offer and is in the best interests of our shareholders. We strongly encourage our shareholders to vote in favour of the plan of arrangement with L-1 at our shareholders' meeting, which will now be held on February 8, 2007."
Mr. Crotty noted that on January 22, 2007 Institutional Shareholder Services (Canada) Corp. (ISS) recommended that shareholders vote in favour of the plan of arrangement with L-1. In its analysis, ISS referred to the "certainty of value at a substantial premium" provided by L-1's offer. ISS concluded that "after assessing the pros and cons of each of the BIO-key Offer and the L-1 Transaction, we would take cash."
ComnetiX shareholders and warrantholders who have previously voted against the plan of arrangement and who now wish to support the amended agreement should do so by voting the Management form of proxy which accompanied the ComnetiX circular or either of the amendments to the ComnetiX circular, or by contacting Georgeson for assistance at 1-866-598-9985.
Pursuant to paragraph 8 of the Interim Order of the Ontario Superior Court of Justice - Commercial List dated December 18, 2006 (the "Interim Order"), ComnetiX has waived the time limits for the deposit of proxies. ComnetiX wishes to remind its shareholders and its warrant holders that time is of the essence, and thus to ensure that each shareholder's or warrant holder's vote will be counted, proxies must be returned in advance of the Meeting or delivered to the Chairman of the Meeting at any time prior to the commencement of the Meeting on February 8, 2007. SHAREHOLDERS AND WARRANTHOLDERS MAY REVOKE A PROXY VOTING AGAINST THE PLAN OF ARRANGEMENT ALREADY GIVEN BY COMPLETING AND DELIVERING A LATER-DATED COMNETIX MANAGEMENT PROXY. A LATER-DATED PROXY AUTOMATICALLY REVOKES ANY AND ALL PRIOR PROXIES GIVEN IN CONNECTION WITH THE MEETING.
L-1 and ComnetiX also agreed to three technical changes to the proposed arrangement. First, the date by which the shareholders meeting to approve the arrangement must be held has been extended to February 8, 2007. Second, the maximum amount payable by ComnetiX to holders of in-the-money stock options has been increased from US$285,000 to US$335,000. Third, the amount of cash that ComnetiX must deliver at the closing of the transaction has been reduced to US$975,000, to reflect an increase in payments by ComnetiX to holders of in-the-money stock options.
ComnetiX will mail an amendment to its management information circular to security holders who are entitled to vote at the annual and special meeting. The amendment to the circular will describe the changes to the arrangement referenced in this press release. All other terms of the arrangement, as described by ComnetiX in its management information circular dated December 18, 2006, as amended on January 10, 2007, remain unchanged.
Pursuant to the Interim Order, ComnetiX has postponed the meeting of shareholders and warrant holders of ComnetiX to Thursday, February 8, 2007. In addition, ComnetiX has changed the location where the meeting of the shareholders and the warrant holders is to take place. The meeting will be held at the Toronto Marriott Downtown Eaton Centre, 525 Bay Street, Toronto, Ontario at 2:00 p.m. to vote on the arrangement, as revised, as well as on other matters. Irrevocable voting agreements in favour of the arrangement have already been signed by directors and officers of ComnetiX, representing approximately 31% of the outstanding shares of ComnetiX. Similar agreements have been signed by the holders of approximately 70% of the outstanding warrants.
About L-1 Identity Solutions
L-1 Identity Solutions, Inc. (NYSE: ID) consists of, among other businesses, the historic operations of Viisage Technology, Inc. and Identix Incorporated, which merged on August 29, 2006. L-1 Identity Solutions, together with its portfolio of companies, offers a comprehensive set of products and solutions for protecting and securing personal identities and assets. Leveraging the industry's most advanced multi-modal biometric platform for finger, face and iris recognition, our solutions provide a circle of trust around all aspects of an identity and the credentials assigned to it -- including proofing, enrollment, issuance and usage. With the trust and confidence in individual identities provided by L-1 Identity Solutions, government entities, law enforcement and border management agencies, and commercial enterprises can better guard the public against global terrorism, crime and identity theft fostered by fraudulent identity. L-1 Identity Solutions is headquartered in Stamford, CT. For more information, visit www.L1ID.com.
About ComnetiX(TM) Inc (www.ComnetiX.com)
ComnetiX(TM) Inc provides secure identification and authentication solutions to both the public and private sectors throughout North America. ComnetiX offers multimode biometric identification solutions for use in areas such as applicant screening, financial services, health care, transportation, airlines and airports, casinos and gaming, and energy and utilities. Clients include American Airlines, Lehman Brothers, New York City Health and Hospital Corporation, New York State Division of Criminal Justice Services, Toronto Police Services Board, Boston Police Department and the Royal Canadian Mounted Police. ComnetiX is also Canada's premier applicant fingerprinting services company, facilitating tens of thousands of criminal background checks each year through its chain of ten offices across Canada. In addition, ComnetiX has established more than 40 applicant fingerprinting services locations throughout the United States.
Forward Looking Statements
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement in this release containing words such as "believes," "plans," "expects" or "intends" and other statements that are not historical facts are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.