Excel Corporation Announces $4.4 Million Hybrid Financing
July 07 2014 - 11:22AM
Company Enters Settlement Agreement With
E-Cig Ventures Exercising Option to Repurchase Merchant Residuals
and Simultaneously Enters Into a Sale and Credit Facility With
BlueAcre Ventures Resulting in Increased Cash and Annual Finance
Cost Savings of $0.6 Million
Excel Corporation (OTC:EXCC), a fast growing U.S. merchant services
provider today announced that it recently completed a $4.4 million
financing transaction with BlueAcre Ventures LLC ("BlueAcre"),
including the sale of $100,000 of the Company's merchant residual
portfolio for cash of $2.8 million and performance-based payments
of a further $400,000 over the next three years, combined with a
$1.2 million, three-year term loan. The comprehensive, multipart
transaction provided for the Company's wholly-owned subsidiary,
Payprotec Oregon LLC dba Securus Payments ("Securus") to repurchase
$200,000 of monthly merchant portfolio residuals previously sold to
E-Cig Ventures LLC ("E-Cig"), resulting in increased cash and
expected net finance cost savings of approximately $0.6 million per
year.
On June 30, 2014, the Company entered into a Settlement and
Release Agreement with E-Cig, settling all amounts due and
exercising its option to repurchase $200,000 of monthly merchant
portfolio residuals previously sold under the Residual Purchase
Agreement and related Option Agreement executed by Securus and
E-Cig on January 28, 2014. Under the terms of the settlement, the
Company paid $2.4 million in cash and issued a note to E-Cig for
$300,000, payable in twelve equal monthly payments starting on
October 1, 2014, at a six percent annual interest rate (the
"Note"). Upon final payment of the Note, E-Cig shall surrender
1,000,000 shares of the Company's Common Stock originally issued to
E-Cig in connection with the Company's purchase of E-Cig's 10%
membership interest in Securus in April 2014.
Simultaneously with the settlement, the Company executed new
financing arrangements with BlueAcre whereby Securus sold $100,000
of its monthly residuals for an immediate cash payment of $2.8
million, with the ability to receive additional cash payments
totaling $400,000 over the next three years. BlueAcre also loaned
$1.2 million to the Company under a promissory note bearing simple
interest of 15% per year that may be reduced to as low as 11% per
year (the "BAV Note"), such interest rate reductions based on the
achievement of certain milestones with respect to signing new
merchant customer applications. The BAV Note is secured by current
residuals and may be prepaid by the Company anytime during the
first twelve months, subject to minimum prepayment penalties. In
connection with the sale of the monthly residuals and the issuance
of the BAV Note, Securus entered into an ISO agreement whereby it
agreed to sign new customers for merchant processing services with
an affiliate of BlueAcre. The ability of the Company to receive the
additional payments and interest rate reductions are tied to
certain minimum performance criteria under the ISO agreement.
Excel Corporation's new CEO and President, T. A. "Kip" Hyde, Jr.
stated, "When our new CFO, Bob Winspear and I joined Excel in
mid-May, we recognized that our first priority was the
restructuring and repurchase of the merchant portfolio residual
base previously sold to E-Cig Ventures by our Securus subsidiary.
After evaluating multiple offers, the unique hybrid residual sale
and term loan financing structure provided to us by BlueAcre
Ventures was clearly the most financially beneficial transaction
for the Company, maximizing both the initial cash payment and
retention of our most valuable current asset, Securus' merchant
portfolio. In addition, BlueAcre's processing affiliate, BlueSquare
Resolutions brings a number of new sales tools and strategic
benefits, unavailable from our other bidders. Completing this
series of transactions was a team effort, and sets a firmer
financial foundation for the Company to continue growing. We look
forward to growing our merchant sales and leasing business with
both our current primary partner, First Data Merchant Services, and
new partner, BlueSquare Resolutions."
Additional information regarding this financing may be found in
Excel Corporation's Report on Form 8-K, filed with the Securities
and Exchange Commission (SEC) on July 7, 2014 and may be obtained
from the SEC's Internet website at www.sec.gov.
About Excel Corporation
Excel Corporation, through its recently acquired wholly-owned
subsidiary, Payprotec Oregon, LLC d/b/a Securus Payments is a
single source provider for all types of merchant payment processing
needs. Headquartered in New York City, the Company is a full
service credit card processor, with sales and merchant support
offices in Portland, OR, San Diego, CA and West Palm Beach, FL.
Through our primary processing partner, First Data Merchant
Services, we provide rapid clearing of payments, with the highest
level of data security available in the industry today. We have
merchant account solutions to meet the unique needs of each
industry segment we service and offer a variety of credit card,
debit card, gift and loyalty card processing options and equipment
to scale with the distinctive business plans of our clients. Excel
Corporation common stock is traded Over-The-Counter under stock
symbol: EXCC.
All statements from Excel Corporation in this news release that
are not based on historical fact are "forward-looking statements"
within the meaning of the PSLRA of 1995 and the provisions of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. While the
Company's management has based any forward-looking statements
contained herein on its current expectations, the information on
which such expectations were based may change. These
forward-looking statements rely on a number of assumptions
concerning future events and are subject to a number of risks,
uncertainties, and other factors, many of which are outside of our
control, that could cause actual results to materially differ from
such statements. Such risks, uncertainties, and other factors
include, but are not necessarily limited to, those set forth under
the caption "Risk Factors" in the Company's most recent Form 10-K
and 10-Q filings, and amendments thereto, as well as other public
filings with the SEC since such date. The Company operates in a
rapidly changing and competitive environment, and new risks may
arise. Accordingly, investors should not place any reliance on
forward-looking statements as a prediction of actual results. The
Company disclaims any intention to, and undertakes no obligation
to, update or revise any forward-looking statement.
CONTACT: Investors & Analysts Contact:
Excel Corporation
bob@solutionstoexcel.com
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