(All figures referenced in Canadian dollars,
except where noted)
- Investment holding company strategy established to drive
future growth
- Aimia Director Philip
Mittleman appointed CEO of Aimia to lead execution of new
strategy
- Lean operating structure with corporate expenses reduced
year-over-year from $27 million to
$15 million annualized
- Aimia Loyalty Solutions ("LS", consisting of Aimia's ILS and
ISS businesses) to merge with Ontario-based Kognitiv Corporation
("Kognitiv") to form a visionary leader in global loyalty market;
Aimia to retain 49% ownership of newly merged private entity at
$525 million valuation; Merger
reduces Aimia's full time employee count from 450 to 20
- Newly merged entity to receive $35
million in 12% convertible preferred share funding:
$21 million from Aimia and
$14 million from Kognitiv's
investors
- Aimia to acquire 100% of Mittleman Brothers LLC in accretive
transaction to create an investment management platform, and obtain
key management skills and expertise. Christopher Mittleman to become Chief Investment
Officer and join Aimia's Board of Directors upon closing of the
transaction
TORONTO,
April 29, 2020 /PRNewswire/ -
AIMIA'S NEW CORPORATE STRATEGY LEVERAGES
EXISTING
INVESTMENTS AS WELL AS CASH AND TAX ASSETS
The recently reconstituted board of directors of Aimia (AIM:
TSX) formed an ad hoc Strategic Review Committee, chaired by
David Rosenkrantz and including
Karen Basian, Charles Frischer and Sandra Hanington, to explore and review
strategic alternatives to create lasting shareholder value.
The result of that process is a decision by the Board of
Directors to focus on long-term investments in public and private
companies, on a global basis, through controlling or minority
stakes. The targeted companies will exhibit durable economic
advantages, evidenced by a well-established track record of
substantial free cash flow generation over complete business
cycles, guided by strong, experienced management teams. Aimia
is now positioned to invest wherever a suitable opportunity can be
identified, in any sector. In addition, Aimia will consider
investments that may efficiently utilize the Company's
approximately $700 million in
operating and capital loss carryforwards to further enhance
stakeholder value.
PHILIP MITTLEMAN APPOINTED CEO
In light of the different skills required by the change in
strategy, the board of directors has appointed Philip Mittleman as interim Chief Executive
Officer and Jeremy Rabe has stepped
down, effective immediately. It is expected that the
appointment will be made permanent upon closing of the Mittleman
Brothers LLC transaction. Charles
Frischer, chair of the board of directors said "At this
exciting stage in Aimia's transformation, we are very pleased to
have Phil step up to lead the organization. Phil's deep commitment
to Aimia has been demonstrated over the past years through his role
as both an investor and a director and he has been instrumental in
protecting shareholder value and creating opportunities for growth
and we look forward to his further contributions as CEO."
Philip Mittleman commented, "I am
extremely proud to join Aimia's management team, and of the work
this reconstituted board has achieved in such a short time.
We have significantly cut costs and right-sized the corporate
expenses, while immediately moving to catalyze stakeholder value in
our operating subsidiaries, and refresh and improve our
relationships with key partners. We have announced a new
corporate strategy, overseen by new management and a new board of
directors with long track records of creating stakeholder value and
I am committed to its successful execution."
LOYALTY SOLUTIONS TO MERGE WITH KOGNITIV
CORPORATION
Aimia has signed a binding letter agreement to merge its Loyalty
Solutions business, which includes Intelligent Shopper Solutions
(ISS) and the Air Miles Middle East program, with Kognitiv
Corporation, an innovator in loyalty peer-to-peer trading and
collaborative commerce, with over $1.3
billion in transactions on its peer-to-peer platform in the
past fiscal year, allowing asset owners to connect to more than 20
loyalty partners. This transaction is anticipated to close on
or about May 29.
The newly merged entity, to be known as Kognitiv, will receive a
total of $35 million in funding in
the form of 12% convertible preferred equity: $21 million from Aimia and $14 million from Kognitiv's investors, at a
combined post-money and post-merger equity valuation of
$525 million, of which Aimia's
initial stake will be 49%. Upon closing, Aimia will appoint
two board members to Kognitiv's board, and an Integration Committee
will be formed consisting of Karen
Basian (Chair), Peter
Schwartz and Philip
Mittleman. An investor presentation has been filed on
SEDAR and will be made available on Aimia's website.
Mr. Mittleman added, "We have completed a successful turnaround
in the Loyalty Solutions business, which was poised to be EBITDA
positive this year on a stand-alone basis. Aimia was
presented with an exciting opportunity in Kognitiv, whose
proprietary AI, peer-to-peer technology allows their partners to
distribute and apply rewards via the Loyalty Capital Network to
maximize yield and consumer lifetime value. The decision to
merge the businesses, each gaining traction in different markets
with strong cost and business synergies, represents an outstanding
opportunity and highlights the significant value that has been
created in the Loyalty Solutions business, while greatly
simplifying Aimia's corporate structure. Kognitiv's extensive
investment in technology will enhance and further enable the
Loyalty Solutions platform, and represents a significant
acceleration of our combined business models which are fully
funded, with the potential to become EBITDA and cash flow positive
in 2021, with accelerating growth in that period and beyond that
far exceeds our previous internal guidance for our loyalty services
division. Importantly, Kognitiv's management and board of
directors bring an invaluable array of talent and business acumen
to the newly merged entity. This transaction is structured
similarly to our highly successful investment in Cardlytics
(Nasdaq: CDLX), where Aimia contributed certain IP, international
operating expertise and board presence along with funding, into an
early-stage tech-forward company, which was subsequently brought
public in an IPO. We believe this merged entity has the
potential for a monetization event that would provide a similar
positive outcome."
Peter Schwartz, Chairman and CEO
of Kognitiv, commented, "Kognitiv Corporation is incredibly excited
by this merger with Aimia Loyalty Solutions. While the world is
gripped by this terrible pandemic, businesses are looking for
partners who can accelerate their recovery when the time is right.
Consumers are looking to the brands that they trust, and are loyal
to, to provide them some relief as well. I strongly believe that
the transformative business created by the merging of Aimia's rich
loyalty heritage and Kognitiv's unique peer-to-peer collaborative
business model can provide some of those answers for both customers
and their consumers. Our transformative business will drive
improved yield for our customers, richer rewards for their
consumers and create a genuine personalized relationship between
them that will truly deepen loyalty. We plan to redefine the
loyalty market and, with this unique combination of expertise,
customer relationships and unique business model, we're confident
we can do just that."
Jefferies LLC served as financial advisor to Aimia Inc. and
Kognitiv in connection with the transaction. The Board of Directors
of Aimia has received a fairness opinion from Clarus Securities,
which states that the consideration to be received by Aimia
pursuant to the Transaction is fair, from a financial point of
view, to the shareholders of Aimia.
LEAN, DEBT-FREE, CASH-RICH HOLDING COMPANY
STRUCTURE
Aimia's reconstituted board has worked with management to
significantly reduce corporate costs. As a result of
decisions recently implemented, Aimia now has an annualized
operating expense run-rate of $15
million for 2020, as compared to $27
million in 2019. This dramatically improved cost
structure enables the company to administer and execute its core
strategy as an investment holding company with no debt, and a much
leaner operational structure. After completing the Loyalty
Solutions merger, Aimia will own 49% of the newly merged Kognitiv,
49% of its joint venture with Aeroméxico (Premier Loyalty &
Marketing ("PLM"), operating as Club Premier), 20% of its joint
venture with AirAsia, BigLife, 100% of Mittleman Brothers LLC and
retains over $265 million in cash and
liquid investments. The number of full time employees at Aimia will
drop from 450 to 20, as operations shift to the newly merged
Kognitiv business.
Charles Frischer, Chairman of the
Board, commented, "This is an exciting day for Aimia
stakeholders. We have assembled a world-class board of
directors to execute our new strategy, each of whom has purchased
Aimia stock in the open market, to oversee our new management
team's efforts to create significant value for Aimia's
stakeholders. We have successfully executed major cost
reductions and restructuring that allows us to move forward as a
lean organization focused entirely on creating value. The
Loyalty Solutions/Kognitiv merger is the first example of how we
plan on unlocking value at Aimia and expect to help shepherd this
exciting merger to what we hope will be a successful liquidity
event. The MB acquisition provides accretive cash flow
benefits, and allows Aimia to appoint Philip Mittleman, a highly capable CEO, to
implement our new corporate strategy, and adds the expertise of
Chris Mittleman in helping to
identify targets for successful deployment of our cash."
AIMIA FORMS INVESTMENT COMMITTEE
As previously announced, Aimia's board of directors has formed
an ad hoc Investment Committee consisting of Charles Frischer, Philip
Mittleman, Michael Lehmann
(Chairman), and Jordan Teramo to
oversee the company's investments. Chris
Mittleman will be added to this committee upon the closing
of the Mittleman Brothers transaction. Members of the ad hoc
Investment Committee are highly skilled in capital allocation with
decades of experience as professional investment managers with
discernible track records of success.
ACQUIRES INVESTMENT MANAGER MITTLEMAN
BROTHERS, LLC
In an accretive transaction, Aimia has signed a definitive
agreement to acquire Mittleman Brothers LLC ("MB"). Mittleman
Brothers LLC owns Mittleman Investment Management, LLC ("MIM"), an
SEC-registered investment adviser that provides discretionary
portfolio management to institutional investors and high-net-worth
individuals. Mittleman Brothers LLC is a well-respected value
investor with a Composite track record that ranks in the top 1% of
Informa Investment Solutions' PSN Global Equity Universe over the
last 17-years ending 12/31/19*. The purchase price
consists of US $5 million in cash and
4 million shares of Aimia stock, of which 2,667,667 shares are held
back for earnout and performance related targets, namely a
significant increase in MIM's assets under management and/or
Aimia's share price trading at a weighted average of C $6.00/share or higher over a consecutive 20 day
trading period. All shares received by Philip and Christopher Mittleman as
consideration for the acquisition will be subject to five year
lockup agreements. Christopher
Mittleman will become Chief Investment Officer and will join
Aimia's Board of Directors and its ad hoc investment committee upon
closing of the transaction.
"The platform and expertise that the Mittleman Brothers
acquisition brings to Aimia will give us additional capabilities
that we need to execute our new strategy, supported by a successful
ongoing business with a positive cash flow," stated Charles Frischer, "Our board of directors is
particularly pleased by the high degree of alignment between the
principles of the Mittleman Brothers team and our long-term, value
creation approach."
The Strategic Review Committee, comprising independent
directors, unanimously recommended that Aimia's Board of Directors
approve the acquisition of MB. The committee obtained a fairness
opinion from an independent investment dealer that the
consideration to be paid by Aimia for MB is fair, from a financial
point of view, to Aimia. Aimia's Board of Directors has unanimously
approved the transaction with the conflicted directors abstaining.
Aimia's acquisition of MB is subject to due diligence and customary
closing conditions.
*Informa Investment Solutions' PSN is an investment manager
database that serves as an objective, third-party supplier of
information. Performance and peer group comparisons are
represented gross of investment management fees. Rankings are
not a guarantee of future results.
About Aimia
Aimia Inc. (TSX: AIM) operates a loyalty solutions business,
which is a well-recognized, global full-service provider of
next-generation loyalty solutions for many of the world's leading
brands in the retail, CPG, travel & hospitality, financial
services and entertainment verticals.
Aimia is focused on growing earnings through its existing
business and investments, including the Club Premier program in
Mexico, which it jointly controls
with Aeromexico through its investment in PLM, and an investment
alongside Air Asia in travel technology company BIGLIFE, the
operator of BIG Loyalty.
For more information about Aimia, visit corp.aimia.com.
Forward-Looking Statements
This press release contains statements that constitute
"forward-looking information" within the meaning of Canadian
securities laws. ("forward-looking statements"), which are based
upon our current expectations, estimated, projections, assumptions
and beliefs. All information that is not clearly historical in
nature may constitute forward-looking statements. In some cases,
forward-looking statements are typically identified by the use of
terms such as "outlook", "guidance", "target", "forecast",
"assumption" and other similar expressions or future or conditional
terms such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "will",
"would", and "should". Forward-looking statements in this
presentation include, but are not limited to, statements with
respect to our current and future plans, expectations and
intentions, results, level of activity, performance, goals and
achievements (including of our equity investments), the anticipated
benefits of the proposed transactions with Kognitiv and
Mittleman Brothers LLC, including expected revenue synergies, cost
synergies and the pro forma financial impact on the combined
businesses resulting therefrom, and the completion and timing of
the transactions.
Forward-looking statements, by their nature, are based on
assumptions and are subject to known and unknown risks and
uncertainties, both general and specific, that contribute to the
possibility that the predictions, forecasts projections and other
forward-looking statement will not occur. The forward-looking
statements in this press release speak only as of the date hereof
and reflect several material factors, expectations and assumptions,
including a number of economic and market assumptions, assumptions
relating to the expected benefits to be realized from the
transaction with Mittleman Brothers and synergies to be realized
from the transaction with Kognitiv, as well as assumptions
regarding currencies and the performance of the economies in which
the company operates and market competition and tax laws applicable
to the company's operations. The company cautions that the
assumptions used to prepare the above guidance, although reasonable
at the time they were made, may prove to be incorrect or
inaccurate. In addition, the guidance does not reflect the
potential impact of any non-recurring or other special items or of
any new material commercial agreements, dispositions, mergers,
acquisitions, other business combinations or other transactions
that may be announced or that may occur after April 29, 2020. The financial impact of these
transactions and non-recurring and other special items can be
complex and depends on the facts particular to each of them. We
therefore cannot describe the expected impact in a meaningful way
or in the same way we presently know about the risks affecting our
business. Accordingly, our actual results could differ materially
from our expectations as set forth in this presentation.
Undue reliance should not be placed on any forecasts,
predictions or forward-looking statements as these may be affected
by, among other things, changing external events and general
uncertainties of the business and its corporate structure. Results
indicated in forward-looking statements may differ materially from
actual results for a number of reasons, including without
limitation, failure of the proposed amalgamation of Aimia's Loyalty
Solutions and ISS businesses (together, "Aimia Loyalty Solutions")
with Kognitiv and the proposed acquisition of Mittleman Brothers
LLC being completed on the contemplated terms and in a timely
manner or at all, failure to realize the anticipated benefits from
the transactions with Kognitiv and/or Mittleman Brothers, the
execution of the strategic plan, investment risks, including in
connection with how and when to deploy and invest Aimia's
considerable cash and other liquid assets, investment partnerships
risks, reliance on key personnel, market price and trading volume
of the common shares and preferred shares, passive foreign
investment company risk, industry competition, failure to protect
intellectual property rights, technological disruptions and
inability to use third-party software and outsourcing, regulatory
matters - privacy, failure to safeguard databases, cyber security
and consumer privacy, uncertainty of dividend declarations and/or
payments on either common shares or preferred shares, tax losses,
business and industry disruptions related to natural disasters,
security issues and global health crises particularly as they might
affect the airline, travel and hospitality sectors, airline
industry changes and increased airline costs, foreign operations,
interest rate and currency fluctuations, retail market/economic
conditions, legal proceedings, audit by tax authorities, as well as
the other factors identified throughout this news release and
throughout Aimia's public disclosure records on file with the
Canadian securities regulatory authorities. A discussion of the
material risks applicable to us can be found in our current
Management and Discussion and Analysis and Annual Information Form,
each of which have been or will be filed on SEDAR and can be
accessed at www.sedar.com. Except as required by applicable
securities laws, forward-looking statements speak only as of the
date on which they are made and we disclaim any intention and
assumes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
Certain of the information contained in this press release
concerning economic trends and performance and market and industry
data is based upon or derived from information provided by third
party consultants and other industry or government sources. We
neither guarantee the accuracy of such information nor have we
independently verified the assumptions upon which projections of
future trends and performance are based. This information and data
is subject to change and cannot always be verified with complete
certainty due to limits on the availability and reliability of raw
data, the voluntary nature of the data gathering process and other
limitations and uncertainties inherent in any statistical survey of
market or industry data. As a result, readers should be aware that
any such information and data set forth in this presentation, and
estimates and beliefs based on such information and data, may not
be reliable. This presentation includes third party logos and
trademarks, which are the property of such third parties.
Unless otherwise indicated or the context otherwise requires,
all references to "$" and "dollars" in this presentation are to
Canadian dollars.
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SOURCE Aimia Inc.
