Creates a Global BPO Services Company Approaching $1 Billion in Projected Revenue in 2010 and Approximately 30,000 Combined Employees
Boston, MA and Manila, Philippines, August 14, 2009 - Stream
Global Services, Inc., (NYSE/AMEX:OOO), and EGS Corp., the indirect
parent company of eTelecare Global Solutions, Inc., jointly
announced today that they have entered into a definitive agreement
to combine in a stock-for-stock exchange. As a result, the current
Stream and EGS Corp. stockholders will own approximately 57.5% and
42.5%, respectively, of the combined entity. The Board of Directors
and principal stockholders of both Stream and EGS Corp. have
unanimously approved the combination. They include Ares Management
LLC and certain founding Stream stockholders representing 90.2% of
the Stream's outstanding shares as of the date of the signing of
the Share Exchange Agreement, as well as EGS Corp.'s owners LiveIt
Investments Ltd., a wholly owned subsidiary of Ayala Corporation,
and Providence Equity Partners LLC, who together own 100% of EGS
Corp.
The combined company, which will retain the Stream Global
Services name, will have North America, Europe, the Philippines,
Latin America, India, the Middle East and Africa. The combination
creates a global business process outsourcing (BPO) company with a
diversified Fortune 1000 customer base, a very experienced
executive team, a comprehensive BPO services portfolio, and
complementary businesses with technical and product leadership
across a wide range of industries, including the technology,
retail, entertainment, media telecommunications and financial
service sectors. The combined company will draw upon the broad
range of service strengths of each business's integrated service
offerings that range from sales and revenue generation to customer
care and technical support, as well as warranty services. It is
estimated that the combined enterprise would have annual revenues
approaching $1 billion for the year ending December 31, 2010.
Scott Murray will continue to be the Chairman and Chief
Executive Officer of the company following the close of the
combination. Alfredo I. Ayala, eTelecare's Chairman, will become
the Non-Executive Vice Chairman of the Board of Directors of Stream
Global Services and will remain the Non-Executive Chairman of the
company's Philippine entity. Of the ten members on the new Board of
Directors, Ares will appoint three directors and one independent
director, and Ayala and Providence will together also appoint three
directors and one independent director. The remaining two directors
will be Mr. Murray and a third independent director, who will also
be the Chairman of the Audit Committee. Stream's corporate
headquarters will continue to be in the Boston area in Wellesley,
MA following the closing. Ares, Ayala (through its wholly owned
company LiveIt) and Providence Equity will own approximately 45.5%,
25.5% and 17.0% respectively, of the combined company. Stream's
Chairman and Chief Executive Officer, Scott Murray, will own
approximately 5% of the combined company.
"This combination brings together two great businesses that are
extremely complementary," said Stream's Chairman and Chief
Executive Officer, Scott Murray. "Since its inception, the vision
for Stream Global Services has been to be a highly differentiated
BPO provider that offers our clients services designed to promote
and build their brands and customer loyalty, while maintaining an
efficient cost model. This combination enables us to fulfill our
vision by leveraging eTelecare's strength in the Philippines, where
it is a market leader and has approximately 10,000 employees and
its depth in service offerings and client diversity." Mr. Murray
went on to say; "I am particularly pleased to have the opportunity
to work closely with Ares, Providence Equity and Ayala as strategic
and long-term investors to help our management team build a
multi-billion dollar revenue company in the future that offers an
integrated BPO service strategy on a global basis."
John Harris, President and Chief Executive Officer of eTelecare
said, "This is a very exciting time in the evolution of eTelecare
to be able to deliver a truly global service offering for our
clients. This combination fulfills our strategic vision of
extending our delivery capability throughout Europe, Asia and Latin
America. The eTelecare team is extremely excited about joining
Stream to create a leading global BPO company."
Mr. Ayala, Chairman of eTelecare and CEO of LiveIt, Ayala
Corp.'s BPO holding company, said, "Ayala Corporation believes that
this combination creates a global BPO company that is one of the
preeminent service providers in the industry and uniquely
positioned to deliver a full range of market leading solutions to
our clients. The combination also underscores our belief that the
Philippines is playing an increasingly critical role in the
outsourcing strategies of global clients, due to its many
advantages. We look forward to working with Scott and his team to
create value over the long-term for our clients, employees and
stockholders."
As a result of this combination, Stream Global Services expects
to:
- Generate projected revenues approaching $1 billion for the year
ending December 31, 2010. The combined company will also have a
strong balance sheet to allow it to make future investments in
technologies, new service offerings for its clients and new
geographic locations such as China, Brazil and Japan.
- Be a top tier global BPO provider by extending its presence to
50 global solution centers with operations in North America,
Europe, the Philippines, India, Latin America, Middle East and
Africa.
- Broaden its services offerings to include a full portfolio of
sales and revenue generation, warranty management, customer loyalty
and brand management, customer care, technical support as well as
customer life cycle management.
- Expand and diversify its blue chip client base across multiple
vertical markets.
- Extend the company's reach into new industry segments such as
financial services, retail and consumer products. In addition, the
combination will significantly expand our market share in the
technology, telecommunications and broadband industries.
- Maintain strong financial sponsorship from Ares Management LLC,
Providence Equity Partners LLC and Ayala Corporation - institutions
that collectively manage over $50 billion in investments.
- Leverage the combined company's investment in technology in
order to provide the highest level of business performance and
enhance operating efficiencies in the business.
- Create a strong platform for future growth in geographies,
service offerings and market segments. The company will continue to
be one of the premier providers of sales and revenue generation,
customer care, technical support and warranty service offerings in
the industry.
- Be led by a very experienced group of management executives
with a proven track record of creating value for clients, employees
and stockholders.
- Create significant new and exciting career advancement and
opportunities for our employees around the world.
Upon the closing of the combination, in accordance with the
terms of Stream's existing Series A and Series B Preferred Stock
held by Ares, the Series A and Series B Preferred Stock will be
converted on closing into approximately 35 million Common shares,
including the issuance of approximately 9 million Common shares
that become due from acceleration of future dividends over the
remaining term of the Preferred Stock. The 7.5 million of Stream's
existing warrants currently held by Ares, with a strike price of
$6.00 per warrant and exercisable until 2018, will be exchanged on
closing for 1.0 million Common shares. All of the Common Stock held
by Ares, including shares issued in connection with the Preferred
Stock conversion, dividend acceleration and warrant exchange, are
included in the 57.5% ownership in the combined company to be held
by the predecessor Stream stockholders immediately following the
closing of the combination. Following the closing of the
combination, Stream will have approximately 80 million Common
shares outstanding and all Preferred Stock will have been converted
to Common shares.
The stockholders agreement, which will be effective upon
closing, grants Ares, Providence Equity and Ayala pre-emptive
rights to acquire 50 million shares of Stream's Common Stock at $6
per share that become exercisable on to the extent that any of our
publicly traded warrants (NYSE/AMEX:OOO.WS) are exercised for $6
per warrant into Common shares. The pre-emptive rights expire when
Stream's public warrants are no longer exercisable after October
17, 2011. The number of pre-emptive rights decline ratably as the
number of public warrants outstanding decline. Stream has
approximately 20.1 million public warrants outstanding as of July
31, 2009.
The transaction is subject to customary closing conditions,
including the submission of an information statement with the
Securities & Exchange Commission and normal regulatory
approvals including clearance under the Hart-Scott-Rodino Antitrust
Improvements Act. As the requisite majority of stockholders of each
company have approved the issuance of shares in the combination of
Stream with EGS Corp., the combination will not require further
approvals of any other stockholders of either Stream or EGS Corp.
The transaction is expected to close in September 2009.
Stone Key Partners LLC served as financial advisor to Stream.
Stream's legal advisor in the transaction was Wilmer Hale LLP and
Proskauer Rose LLP served as legal advisor to Ares. EGS's financial
advisor was Morgan Stanley & Co., Incorporated and its legal
advisor was Weil, Gotshal & Manges LLP.
Contact Information:
Nancy Finn
Global Marketing Communications
nancy.finn@stream.com
781-304-1846 About Stream Global Services
Stream Global Services is a premium business process outsource (BPO) service provider specializing
in customer relationship management including sales, customer care and technical support for Fortune
1000 companies. Stream is a trusted partner to some of the world's leading technology, computing,
telecommunications, retail, entertainment/media, and financial services companies. Our service programs
are delivered through a set of standardized best practices and sophisticated technologies by a highly
skilled workforce of approximately 30,000 employees based out of 50 solution centers in 22 countries
supporting more than 35 languages. Stream continues to expand its global presence and service offerings
to increase revenue, improve operational efficiencies and drive brand loyalty for its clients. To learn
more about the company and its complete service offering, please visit www.stream.com.
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