CALGARY, June 22 /CNW/ - Quantum Yield Inc. ("Quantum") reports today that since announcing its offer on June 19, 2007 to acquire all of the issued and outstanding common shares ("Pulse Shares") of Pulse Data Inc. ("Pulse") (TSX: PSD), the company has received significant interest in the offer.
"In the numerous calls from analysts, institutional investors and retail shareholders, a common theme prevails," said Jim Durward, President of Quantum. "Change is desired but people want to fully understand the terms and conditions of the Debentures as well as the future upside participation," he said.
While the terms and conditions of the Debentures are generally set forth in Quantum's Offer and Circular dated June 19, 2007 (the "Circular"), Quantum summarizes such information as follows:
Security. Pulse shareholders should be aware that the same assets that currently provide value for their Pulse Shares (i.e. the seismic databases, the internal data storage and delivery systems, Terrapoint, and all other assets of Pulse) (the "Assets") will also provide the value and security for the Debentures after the amalgamation of Pulse and Quantum (the "Amalgamation"). After the Amalgamation, the Debentures will have a direct security charge on all of the Assets, which will then include Quantum's LeadScan license, and will rank ahead of the holders of common equity. In other words, Debentureholders will be paid out prior to holders of common equity. Holders of Pulse Shares currently do not have such security.
Interest Payments. The interest payments on the Debentures are contractual and must be paid quarterly when Free Cash Flow (defined in the Definitions section of the Circular as the remainder of the amalgamated entity's operating income after paying operating expenses, general and administrative costs, bank or priority lender interest expense, seismic participation program costs and income taxes) is available. The terms of the Debentures also provide that if any interest has been accrued due to lack of Free Cash Flow, and not paid, then the amalgamated entity will not be able to use company funds to pay for participation programs. This essentially means that the interest payments are secured by a direct charge on the Free Cash Flow. Dividends paid on Pulse Shares fluctuate and could be changed at any time and there is no contractual obligation to pay them.
Liquidity. When structuring the offer, Quantum would have preferred to conditionally list the Debentures for trading on a stock exchange. Unfortunately, this could not be done until after completion of the offer and the Amalgamation. The Circular provides that upon completion of the Amalgamation, it is anticipated that application will be made to list the Debentures for trading on a stock exchange in order to provide liquidity for holders of Debentures. Quantum re-iterates this commitment and has no reason to believe that such an application would be denied.
Premium. Once the offer is successfully completed, beyond their entitlement to the payment of the principal amount of the Debentures and all interest payments, the Debentureholders will have no further access to any benefits associated with the streamlining activities of the amalgamated entity (i.e. if these activities increase the Free Cash Flow beyond the value of the Debentures, the Debentureholders do not directly benefit). With this in mind, Quantum is offering a substantial premium to Pulse's book value - approximately a 100% premium. Quantum believes that this premium takes into account the fact that Pulse shareholders are receiving Debentures rather than cash and provides for future participation, contractually and up-front.
Debt to Equity. Pulse commented in its news release of June 20, 2007 that the transaction is 100% debt and zero equity. In response, Quantum notes that the all-debt structure of the offer provides for increased cash distributions to the Debentureholders and is more efficient than a dividend paying structure.
Mr. Durward firmly believes that the offer represents a very good value for Pulse shareholders and has expressed his desire to help Pulse shareholders understand the terms of the offer.
Questions and requests for assistance may also be directed to Kingsdale Shareholder Services Inc., the information agent for the offer, or to Valiant Trust Company, the depository for the offer, as follows:
Kingsdale Shareholder Services Inc.
The Exchange Tower
130 King Street West
Suite 2950, P.O. Box 361
Toronto, Ontario M5X 1E2
North American Toll Free Phone: 1-800-749-9197
Email: contactus@kingsdaleshareholder.com
Facsimile: 416-867-2271
Toll Free Facsimile: 1-866-545-5580
International Brokers Call Collect: 416-867-2272
North American Banks and Brokers Call Collect: 416-867-2317
Valiant Trust Company
Suite 310, 606 - 4th Avenue SW
Calgary, Alberta T2P 1T1
Attention: Reorganization Department
Toll Free Tel: (866) 313-1872
Calgary Tel: (403) 233-2801
Facsimile: (403) 233-2857
Email: inquiries@valianttrust.com
Shareholders of Pulse are urged to read the formal offer circular and take-over bid documents that have been publicly filed and will be subsequently mailed to Pulse's shareholders because they will contain important information about the offer for Pulse Shares. These documents are available without charge under Pulse's profile on the SEDAR website at www.sedar.com. Additional copies of the formal offer circular and related take-over bid documents will also be available at the principal offices of both Kingsdale Shareholder Services Inc. and Valiant Trust Company set forth above.
This news release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements or information are based on a number of assumptions which may prove to be incorrect. Although Quantum believes that the expectations reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on such forward-looking statements because Quantum can not give assurance that such expectations will prove to be correct. Forward-looking statements or information are based on current expectations, estimates and projections that involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated by Quantum and described in the forward-looking statements or information. The forward-looking statements or information contained in this news release are made as of the date hereof and Quantum does not undertake any obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. There can be no assurance that the offer will occur, or will occur on the timetable contemplated hereby.
This press release is neither an offer to purchase or exchange nor a solicitation of an offer to sell or exchange Pulse Shares. The offer is made solely by the formal offer circular and take-over bid documents, and any amendments or supplements thereto, and is being made to all holders of Pulse Shares. The offer is not being made to, nor will Pulse Shares be accepted from or on behalf of, holders of Pulse Shares in any jurisdiction in which the making of the offer or the acceptance thereof would not be in compliance with applicable law.