TIDMARTA
RNS Number : 8503W
Artilium PLC
06 August 2018
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF
SUCH JURISDICTION
For immediate release
This announcement contains inside information
6 August 2018
RECOMMED SHARE AND CASH OFFER FOR ARTILIUM PLC BY
PARETEUM CORPORATION
Filing of Definitive Proxy Statement, Timetable Update and
Announcement of Profit Forecasts and Quantified Financial Benefits
Statements
On 7 June 2018, the respective Boards of Pareteum Corporation
("Pareteum") and Artilium plc ("Artilium") announced the terms of a
recommended share and cash offer by Pareteum for the issued and to
be issued share capital of Artilium not already owned by Pareteum
(the "Acquisition"). On 12 July 2018, Pareteum announced that, in
connection with the Acquisition, it had filed a preliminary proxy
statement with the U.S. Securities and Exchange Commission (the
"SEC").
Filing of Definitive Proxy Statement
On 3 August 2018, Pareteum filed the definitive proxy statement
("Proxy Statement") with the SEC, and on or around 8 August 2018
intends to mail it to Pareteum stockholders of record. A copy of
the Proxy Statement is available at:
https://www.sec.gov/Archives/edgar/data/1084384/000114420418041940/tv500110_defm14a.htm
Timetable Update
Pursuant to the filing of the Proxy Statement, the Pareteum
stockholders meeting to approve the Acquisition is being convened
for 13 September 2018. Pareteum and Artilium still expect the
scheme of arrangement document to be posted to Artilium
shareholders in August 2018 and the effective date of the scheme,
in line with previous announcements, is still expected to be in
September 2018. The Artilium general and court meetings in relation
to the scheme of arrangement are expected to be convened for
shortly after the Pareteum stockholders meeting. The scheme
document will contain a full anticipated timetable with respect to
the Acquisition.
Profit Forecasts and Quantified Financial Benefits
Statements
Within the Proxy Statement, and as further detailed in the
appendix to this announcement, certain projections and financial
measures of performance (variously covering Adjusted EBITDA, Gross
Profit, Net Income, Basic EPS and Diluted EPS) have been published
in respect of Pareteum and Artilium. Certain of these figures will
also be included in Pareteum's announcement of its second quarter
2018 results, and an updated investor presentation in respect of
the Acquisition, both due to be published today.
These technically constitute "profit forecasts" for the purposes
of Rule 28 of the City Code on Takeovers and Mergers (the "Code"),
and accordingly either (as relevant) (a) have been reported on by
Squar Milner LLP ("Squar Milner") and Jefferies International
Limited ("Jefferies") or (b) are subject to "directors'
confirmations" by the directors of Pareteum/Artilium (as relevant)
pursuant to Rule 28.1(c)(i) of the Code.
Within the Proxy Statement, and as further detailed in the
appendix to this announcement, certain statements were also
included regarding estimated cost synergies arising from the
Acquisition. These statements will also be included in Pareteum's
announcement of its second quarter 2018 results, and the updated
investor presentation in respect of the Acquisition. These
statements technically constitute "quantified financial benefit
statements" for the purposes of Rule 28 of the Code, and
accordingly have been reported on by Squar Milner and
Jefferies.
Please see the appendix to this announcement for further details
of the profit forecasts and quantified financial benefit
statements, together with the reports from Squar Milner and
Jefferies. Each of Jefferies and Squar Milner has given and not
withdrawn its consent to the inclusion of its reports in this
announcement in the form and context in which they are
included.
In accordance with Rule 26.1 of the Code, a copy of this
announcement, the Pareteum second quarter 2018 results
announcement, the reports from Jefferies and Squar Milner referred
to above and the updated investor presentation in respect of the
Acquisition will be made available on the website of Pareteum at
www.pareteum.com/investors by no later than 12 noon (London time)
on the business day following this announcement.
For further information please contact:
Enquiries:
Pareteum
Denis McCarthy, SVP Corporate Development Tel: +1 (212) 984
Alexander Korff, Company Secretary 1096
Edward O'Donnell, Chief Financial Officer
Jefferies (Financial adviser to Pareteum)
(UK) Simon Brown Tel: +44 (0)20 7029
(US) Timothy Roepke 8000
Jeffrey Snyder Tel: +1 (212) 284
2300
Artilium
Jan-Paul Menke, Non-Executive Chairman Tel: +32 (0) 5023
Bart Weijermars, Chief Executive Officer 0300
Rupert Hutton, Chief Finance Officer
finnCap Ltd (Financial adviser under Rule 3
of the Code, Nominated Adviser and broker to
Artilium)
Jonny Franklin-Adams Tel:+44 (0)20 7220
Henrik Persson 0500
Anthony Adams
Dealing Disclosure requirements
Under Rule 8.3(a) of the Code, any person who is interested in 1
per cent. or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of: (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 p.m. (London time) on the 10th Business Day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 p.m. (London time) on the 10th Business Day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1 per cent. or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each
of: (i) the offeree company and (ii) any securities exchange
offeror, save to the extent that these details have previously been
disclosed under Rule 8. A Dealing Disclosure by a person to whom
Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London
time) on the Business Day following the date of the relevant
dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror, and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Takeover Panel's Market
Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as
to whether you are required to make an Opening Position Disclosure
or a Dealing Disclosure.
No Offer or Solicitation
This Announcement is provided for informational purposes only
and does not, and is not intended to, constitute, or form part of,
an offer to sell, or an invitation to subscribe for, purchase or
exchange, any securities or the solicitation of any vote or
approval in any jurisdiction, nor shall there be any sale,
issuance, exchange or transfer of the securities referred to in
this announcement in any jurisdiction in contravention of
applicable law.
The transaction referred to above will be implemented solely by
means of a scheme document (the "Scheme Document") and accompanying
forms of proxy (or, in the event that the transaction is to be
implemented by means of a takeover offer, a takeover offer
document), which will contain the full terms and conditions of the
transaction. Any vote in respect of the transaction and related
matters should be made only on the basis of the information
contained in the Scheme Document. This Announcement does not
constitute a prospectus or a prospectus equivalent document.
Forward-looking statements
This Announcement may include forward-looking statements within
the meaning of Section 27A of the US Securities Act and Section 21E
of the US Exchange Act with respect to the financial condition,
results of operations and business of Pareteum, Artilium or the
combined group and certain plans and objectives of Pareteum with
respect thereto . Forward-looking statements are based on current
expectations and projections about future events. By their nature,
forward-looking statements involve known and unknown risks and
uncertainties because they relate to events and depend on
circumstances that will occur in the future. Pareteum's actual
results may differ materially from those discussed herein, or
implied by, these forward-looking statements. Forward-looking
statements are generally identified by words such as "believe,"
"expect," "hope," "anticipate," "target," "intend," "estimate,"
"plan," "goal," "aim," "project," "should," "will," "may," "would,"
"could," "continue," "likely" or the negative or plural of such
words and other similar expressions. In addition, any statements
that refer to expectations or other characterizations of future
events or circumstances are forward-looking statements. The
statements that contain these or similar words should be read
carefully because these statements discuss Pareteum's future
expectations, contain projections of Pareteum's future results of
operations or of Pareteum's financial position, business strategy,
short-term and long-term business operations and objectives,
financial needs and other "forward-looking" information. These
forward-looking statements are subject to a number of risks,
uncertainties and assumptions, including, without limitation: the
risk that the Acquisition is not completed on a timely basis or at
all; the ability to integrate Artilium into Pareteum's business
successfully and the amount of time and expense spent and incurred
in connection with the integration; the possibility that competing
offers will be made; the risk that the economic benefits and other
synergies that Pareteum management anticipates as a result of the
Acquisition are not fully realized or take longer to realize than
expected; the risk that certain risks and liabilities associated
with the Acquisition have not been discovered; the risk that the
approval of Artilium shareholders of the Acquisition or the
approval of Pareteum stockholders of the Pareteum Stockholder
Resolution may not be obtained or that other Conditions of the
Acquisition will not be satisfied; changes in global or local
political, economic, business, competitive, market and regulatory
forces; changes in exchange and interest rates; changes in tax and
other laws or regulations; future business combinations or
disposals; operating costs, customer loss and business disruption
(including difficulties in maintaining relationships with
employees, customers or suppliers) occurring prior to completion of
the Acquisition or if the Acquisition is not completed at all;
changes in the market price of shares of Pareteum or Artilium; and
changes in the economic and financial conditions of the businesses
of Pareteum or Artilium.
The foregoing does not represent an exhaustive list of risks.
Additional factors are described in the Proxy Statement and
Pareteum's public filings with the SEC. Moreover, Pareteum operates
in a very competitive and rapidly changing environment. New risks
emerge from time to time. It is not possible for Pareteum's
management to predict all risks, nor can Pareteum assess the impact
of all factors on its business or the extent to which any factor,
or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements
Pareteum may make. In light of these risks, uncertainties and
assumptions, the future events and trends discussed in this
Announcement may not occur and actual results could differ
materially and adversely from those anticipated or implied in the
information in this Announcement.
Any forward-looking statements in this Announcement are not
guarantees of future performance, and actual results, developments
and business decisions may differ from those contemplated by those
forward-looking statements, possibly materially. Accordingly, you
should not place undue reliance on any such forward-looking
statements. All forward-looking statements included in this
Announcement are based on information available to Pareteum
management on the date of such information. Except to the extent
required by applicable laws or rules, neither Pareteum nor Artilium
undertakes any obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral
forward-looking statements attributable to Pareteum or persons
acting on its behalf are expressly qualified in their entirety by
the cautionary statements contained throughout this
Announcement.
Important Additional Information Regarding the Transaction Will
Be Filed With the SEC
The Acquisition relates to the shares of a UK company and is
being made by means of a scheme of arrangement provided for under
the laws of England and Wales (in particular, Part 26 of the
Companies Act 2006). A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules under the US
Exchange Act and is exempt from the registration requirements under
the US Securities Act. Accordingly, the Acquisition will be subject
to disclosure requirements and practices applicable to schemes of
arrangement under the laws of England and Wales involving a target
company in England listed on AIM, which are different from the
disclosure and other requirements of a US tender offer and US
securities laws.
It may be difficult for US holders of Artilium Shares to enforce
their rights and any claims they may have arising under US federal
securities laws in connection with the Acquisition, since Artilium
is incorporated under the laws of a country other than the US, and
some or all of its officers and directors may be residents of
countries other than the US, and most or all of the assets of
Artilium are located outside of the US. US holders of Artilium
Shares may not be able to sue a non-US company or its officers or
directors in a non-US court for violations of US securities laws.
Further, it may be difficult to compel a non-US company and its
affiliates to subject themselves to a US court's jurisdiction or
judgment.
The Acquisition may, in the circumstances provided for in this
Announcement, instead be carried out by way of a Takeover Offer
under the laws of England and Wales. If Pareteum exercises its
right to implement the Acquisition by way of a Takeover Offer, such
Takeover Offer will be made in compliance with applicable US tender
offer and securities laws and regulations, including the exemptions
therefrom. In accordance with normal UK practice, Pareteum or its
nominees, or its brokers (acting as agents), may from time to time
make certain purchases of, or arrangements to purchase, Artilium
Shares outside of the US, other than pursuant to the Acquisition,
until the date on which the Acquisition becomes effective, lapses
or is otherwise withdrawn. These purchases may occur either in the
open market at prevailing prices or in private transactions at
negotiated prices. Any information about such purchases will be
disclosed, as required in the UK, will be reported to a Regulatory
Information Service and will be available on the London Stock
Exchange website at www.londonstockexchange.com.
INVESTORS AND SECURITY HOLDERS OF PARETEUM ARE URGED TO READ
THESE MATERIALS (INCLUDING ANY AMMENTS OR SUPPLEMENTS THERETO) AND
ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE ACQUISITION
THAT PARETEUM WILL FILE WITH THE SEC WHEN SUCH MATERIALS BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
PARETEUM, THE PROPOSED ISSUANCE OF THE NEW PARETEUM SHARES AND THE
ACQUISITION. The Proxy Statement and other relevant materials in
connection with the proposed issuance of the New Pareteum Shares
and the Acquisition (when they become available), and, if required,
the registration statement/prospectus and other documents filed by
Pareteum with the SEC, may be obtained free of charge at the SEC's
website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC at
Pareteum's website, www.pareteum.com, or by contacting Pareteum's
Investor Relations department in writing at 1185 Avenue of the
Americas, 37th floor, New York, NY 10036, United States of America,
or by e-mail at InvestorRelations@pareteum.com.
To the extent Pareteum effects the acquisition of Artilium as a
scheme of arrangement under the laws of England and Wales, the New
Pareteum Shares to be issued in the acquisition will be issued in
reliance on the exemption from the registration requirements of the
U.S. Securities Act provided by Section 3(a)(10) thereof. Artilium
will advise the Court that its sanction of the scheme of
arrangement will be relied upon by Artilium and Pareteum as an
approval of the scheme of arrangement following a hearing on its
fairness to Artilium shareholders at which hearing all such
shareholders are entitled to attend in person or through counsel to
support or oppose the sanctioning of the scheme of arrangement and
with respect to which notification has been given to all Artilium
shareholders. In the event that Pareteum determines to effect the
Acquisition pursuant to a Takeover Offer or otherwise in a manner
that is not exempt from the registration requirements of the US
Securities Act, it will file a registration statement with the SEC
containing a prospectus with respect to the New Pareteum Shares
that would be issued in the Acquisition. In this event, Artilium
Shareholders are urged to read these documents and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they will contain important
information, and such documents will be available free of charge at
the SEC's website
at www.sec.gov or by directing a request to Pareteum's contact
for enquiries identified above. Neither the SEC nor any U.S. state
securities commission has approved or disapproved of the New
Pareteum Shares to be issued in connection with the Acquisition, or
determined if this Announcement is accurate or complete. Any
representation to the contrary is a criminal offence in the
U.S.
Overseas jurisdictions
The release, publication or distribution of this announcement in
or into jurisdictions other than the UK may be restricted by law
and therefore any persons who are subject to the law of any
jurisdiction other than the UK should inform themselves about, and
observe, any applicable legal or regulatory requirements. Any
failure to comply with the applicable restrictions may constitute a
violation of the securities laws of any such jurisdiction. To the
fullest extent permitted by applicable law, Pareteum disclaims any
responsibility or liability for the violation of such restrictions
by any person. Copies of this announcement and any formal
documentation relating to the transaction referred to above will
not be and must not be, directly or indirectly, mailed or otherwise
forwarded, distributed or sent in, into or from any jurisdiction
where to do so would violate the laws of that jurisdiction and
persons receiving such documents (including custodians, nominees
and trustees) must not mail or otherwise forward, distribute or
send them in, into or from any such jurisdiction. Further details
in relation to overseas shareholders will be contained in the
Scheme Document.
Participants in the Solicitation
Pareteum and its directors, officers, employees and agents may
be considered participants in the solicitation of proxies from
Pareteum's stockholders in respect of the Acquisition, including
the issuance of shares of Pareteum's common stock in relation to
the Acquisition. Information about Pareteum's directors and
executive officers is set forth in Pareteum's Annual Report on Form
10-K for the year ended December 31, 2017 which was filed with the
SEC on March 30, 2018, and Pareteum's proxy statement for its 2017
annual meeting of stockholders, which was filed with the SEC on
July 27, 2017. Other information regarding potential participants
in the proxy solicitations and a description of their direct and
indirect interests, by security holdings or otherwise, is contained
in the Proxy Statement and other relevant documents when they
become available.
General
A copy of this announcement and the documents required to be
published by Rule 26 of the Code will be made available, subject to
certain restrictions relating to persons resident in restricted
jurisdictions, on Pareteum's website at www.pareteum.com/investors,
and Artilium's website at www.artilium.com/investors. For the
avoidance of doubt, the contents of that website are not
incorporated into and do not form part of this announcement.
In accordance with Rule 30.3 of the Code, a person so entitled
may request a hard copy of this Announcement, free of charge, by
contacting Jefferies on +44 (0)20 7029 8000. For persons who
receive a copy of this Announcement in electronic form or via a
website notification, a hard copy of this Announcement will not be
sent unless so requested. In accordance with Rule 30.3 of the Code,
a person so entitled may also request that all future documents,
announcements and information to be sent to them in relation to the
Acquisition should be in hard copy form.
If you are in any doubt about the contents of this Announcement
or the action you should take, you are recommended to seek your own
independent financial advice immediately from your stockbroker,
bank manager, solicitor, accountant or independent financial
adviser duly authorised under the Financial Services and Markets
Act 2000 (as amended) if you are resident in the UK or, if not,
from another appropriately authorised independent financial
adviser.
Important notices
Jefferies International Limited ("Jefferies"), which is
authorised and regulated by the Financial Conduct Authority (the
"FCA") in the United Kingdom, is acting exclusively for Pareteum as
financial adviser and no one else in connection with the
Acquisition and other matters set out in this Announcement and will
not be responsible to anyone other than Pareteum for providing the
protections afforded to clients of Jefferies, or for providing
advice in connection with the Acquisition, the content of this
Announcement or any matter referred to herein. Neither Jefferies
nor any of its subsidiaries, affiliates or branches owes or accepts
any duty, liability or responsibility whatsoever (whether direct,
indirect, consequential, whether in contract, in tort, under
statute or otherwise) to any person who is not a client of
Jefferies in connection with this Announcement, any statement
contained herein or otherwise.
finnCap, which is authorised by and regulated by the FCA in the
United Kingdom, is acting exclusively as financial adviser under
Rule 3 of the Code, nominated adviser and broker to Artilium and no
one else in connection with the Acquisition and other matters
referred to in this Announcement and will not be responsible to
anyone other than Artilium for providing the protections afforded
to clients of finnCap, or for providing advice in connection with
the Acquisition, the content of this Announcement or any matter
referred to herein. Neither finnCap nor any of its subsidiaries or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct, indirect, consequential, whether in
contract, in tort, under statute or otherwise) to any person who is
not a client of finnCap in connection with this Announcement, any
statement contained herein or otherwise.
APPIX
Profit Forecasts and Quantified Financial Benefits
Statements
Reference is made to pages 45-46 of Pareteum's Proxy Statement
(an extract of which is set out below (the "Extract")), where
certain projections and financial measures of performance
(variously covering Adjusted EBITDA, Gross Profit, Net Income,
Basic EPS and Diluted EPS) have been published in respect of:
(a) Pareteum on a standalone basis for the financial year ending
31 December 2018 (labelled "(a)" below, the "Pareteum Standalone
2018 Profit Forecasts");
(b) Pareteum on a standalone basis for the financial years
ending 31 December 2019, 31 December 2020, 31 December 2021 and 31
December 2022 (labelled "(b)" below, the "Pareteum Standalone
Extended Profit Forecasts");
(c) Artilium for the 12 month periods ending 31 December 2018,
31 December 2019, 31 December 2020, 31 December 2021 and 31
December 2022 (labelled "(c)" below, the "Artilium Standalone
Profit Forecasts");
(d) Pareteum and Artilium on a combined basis, for the financial
years ending 31 December 2019, 31 December 2020, 31 December 2021
and 31 December 2022, without reflecting estimated cost synergies
or non-cash or other purchase accounting adjustments (labelled
"(d)" below, the "Combined Projections").
Each of these technically constitute "profit forecasts" for the
purposes of Rule 28 of the Code.
EBITDA is a non-GAAP financial measure defined as earnings
before interest, taxes, depreciation and amortization. Adjusted
EBITDA is a non-GAAP measure defined as EBITDA excluding one-time,
non-recurring and non-cash items and stock-based compensation
expense. Non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
presented in compliance with GAAP. Artilium's financials were
adjusted by Pareteum's management and calendarized to December 31
and converted to U.S. Dollars.
Statements were also included in the Proxy Statement regarding
estimated cost synergies arising from the Acquisition (labelled
"(e)" below, the "Quantified Financial Benefits Statements").
The Pareteum Standalone 2018 Profit Forecasts, Pareteum
Standalone Extended Profit Forecasts, Artilium Standalone Profit
Forecasts, Combined Projections and Quantified Financial Benefits
Statements (together the "Financial Projections") were prepared by
Pareteum's management in connection with Pareteum's consideration
and evaluation of the Acquisition, and in order to provide a basis
for discussions (including adjusting for this purpose certain
financial measures of performance of Artilium prepared by
Artilium), which Pareteum's management provided to the directors of
Pareteum ("Pareteum Directors") and to Jefferies. The Financial
Projections were included in Pareteum's Proxy Statement to comply
with Pareteum's obligations under US federal and state laws to give
Pareteum stockholders access to certain non-public information that
was made available to the Pareteum Board for the purpose of
considering and evaluating the Acquisition and to Jefferies for the
purposes of performing its financial analyses in connection with
rendering its fairness opinion.
The inclusion of this information should not be regarded as an
indication that the Pareteum Board, Pareteum, or Jefferies
considered, or now considers, the Financial Projections to be
material information of Pareteum.
The Financial Projections are subjective in many respects and
thus subject to interpretation. While presented with numerical
specificity, the Financial Projections reflect numerous estimates
and assumptions with respect to industry performance and
competition, general business, economic, market and financial
conditions and matters specific to Pareteum's and Artilium's
respective businesses, all of which are difficult to predict and
many of which are beyond Pareteum's or Artilium's control. Many of
the assumptions reflected in the Financial Projections are subject
to change and none of the Financial Projections reflect revised
prospects for Pareteum's or Artilium's respective businesses,
changes in general business or economic conditions or any other
transaction or event that has occurred or that may occur and that
was not anticipated at the time such financial information was
prepared. Pareteum's management has not updated, nor does
Pareteum's management intend to update or otherwise revise, the
Financial Projections. There can be no assurance that the results
reflected in any of the Financial Projections will be realized or
that actual results will not materially vary from the Financial
Projections. In addition, the Financial Projections cover multiple
years and such information by its nature becomes less predictive
with each successive year. Therefore, the inclusion of the
Financial Projections in the Proxy Statement should not be relied
on as necessarily predictive of actual future events nor construed
as financial guidance.
Neither Pareteum's nor Artilium's independent registered public
accounting firm, nor any other independent accountants, have
compiled, examined, or performed any procedures with respect to the
Pareteum Standalone Extended Profit Forecasts, Artilium Standalone
Profit Forecasts or Combined Projections (the "Unreported
Projections"), nor have they expressed any opinion or any other
form of assurance on the Unreported Projections or the
achievability of the results reflected in the Unreported
Projections, and they assume no responsibility for, and disclaim
any association with, the Unreported Projections. The reports set
out below of Squar Milner, as reporting accountants to Pareteum,
and Jefferies, as financial adviser to Pareteum, relate to the
Pareteum Standalone 2018 Profit Forecasts and Quantified Financial
Benefits Statements, and do not extend to the Unreported
Projections and should not be read to do so.
Extract:
The following table presents a summary of Financial Projections
with respect to Pareteum on a standalone basis:
Pareteum Financial Projections
For the Years Ended December 31
------------------------------------------------------
2018E 2019E 2020E 2021E 2022E
------ ----- ----- ----- -----
(USD in millions)
Revenue 24.0 43.3 65.3 91.4 123.3
Adjusted EBITDA 4.8 (a) 13.0 (b) 21.1 (b) 32.3 (b) 43.6 (b)
Pareteum (Standalone Basis)
Unlevered Free Cash Flow (4.0) (1) 2.8 5.1 11.3 17.0
(1) For the nine-month period April 2018 through December
2018.
The following table presents a summary of Financial Projections
with respect to Artilium on a standalone basis:
Artilium Financial Projections
For the Years Ended December 31
----------------------------------------------------
PF 2017
(1) 2018E 2019E 2020E 2021E 2022E
-------- ------ ----- ------ ----- -------
(USD in millions)
Revenue 23.6 25.0 31.6 39.4 46.2 51.9
Adjusted EBITDA 1.3 2.3(c) 4.2 (c) 6.9(c) 9.8 (c) 12.3(c)
Artilium (Standalone
Basis) Unlevered
Free Cash Flow (2.0) (2) 3.5 2.6 4.9 6.3
(1) Pro forma reflecting the acquisition of Interactive Digital
Media GmbH.
(2) For the nine-month period April 2018 through December
2018.
Based on the foregoing estimates for Pareteum and Artilium,
Pareteum's management estimated the pro forma FY2018 revenues of
the combined company as $49.0 million, excluding the impact of
purchase accounting adjustments.
Pareteum's management also estimated cost synergies of
approximately $4.8 million(e) to result from the Acquisition for
the one-year period from the anticipated date of closing. Cost
synergies expected to result from the Acquisition include reduced
SG&A expenses and headcount reductions.
In addition, Pareteum made a statement in connection with its
first quarter 2018 results, which was disclosed as a profit
forecast in the Offer Announcement. For information regarding the
statement and related assumptions, see Appendix IV to the Offer
Announcement, attached as Annex I to this proxy statement.
Supplemental Illustrative Presentation of Certain Financial
Projections
The following table, which was prepared for illustrative
purposes in connection with this proxy statement, presents a
summary of Financial Projections for the period indicated below
with respect to Pareteum and Artilium, each on a standalone basis,
and estimated cost synergies and the sum totals of such amounts,
based on certain assumptions, including that the Acquisition was
completed on January 1, 2018 but without reflecting non-cash or
other purchase accounting adjustments:
Financial Projections
For the Year Ended December 31, 2018
-----------------------------------------------------------------
Pareteum Artilium Cost Synergies(1) Total
---------- -------- ------------------- ------
(USD in millions)
Revenue $ 24.0 $ 25.0 $ 49.0
Cost of Goods Sold (6.7) (11.1) 0.5 (17.3)
Gross Profit 17.3 (a) 13.9(c) 0.5 (e) 31.7
Operating Expenses (20.2) (13.8) 4.3 (e) (29.7)
Non-Operating Expenses (0.3) (0.1) (0.4)
Net Income $ (3.2 )(a) $ 0.0 (c) $ 4.8(e) $ 1.6
Adjusted EBITDA $ 4.8 (a) $ 2.3 (c) $ 4.8 (e) $ 11.9
Basic EPS - - - $ 0.02
Diluted EPS - - - $ 0.02
(1) Cost synergies include reduced SG&A expenses and headcount reductions.
The following table, which was prepared for illustrative
purposes in connection with this proxy statement, presents a
summary of Financial Projections for the periods indicated below
with respect to Pareteum and Artilium, on a combined basis, without
reflecting estimated cost synergies or non-cash or other purchase
accounting adjustments:
Financial Projections
For the Years Ended December 31,
-------------------------------------------------
2019E 2020E 2021E 2022E
-------- ------ -------- ------
(USD in millions)
Revenue $ 74.9 $104.6 $ 137.5 $175.2
Cost of Goods Sold (26.9) (37.0) (47.0) (58.0)
Gross Profit 48.0 (d) 67.6 (d) 90.5 (d) 117.2 (d)
Operating Expenses (41.7) (50.5) (61.8) (73.0)
Non-Operating Expenses (2.8) (8.1) (13.5) (14.9)
Net Income $ 3.5 (d) $ 9.0 (d) $ 15.3 (d) $ 29.3 (d)
Adjusted EBITDA $17.2(d) $ 28.0 (d) $42.1(d) $ 55.9 (d)
Basic EPS $ 0.04 (d) $ 0.10 (d) $ 0.16 (d) $ 0.30 (d)
Diluted EPS $ 0.03 (d) $ 0.08 (d) $ 0.14 (d) $ 0.26 (d)
Reconciliation of Non-GAAP Financial Measures
The following table, which was prepared for illustrative
purposes in connection with this proxy statement, presents a
reconciliation of estimated net income for Artilium and Pareteum,
on a combined basis taking into account estimated cost synergies
but without reflecting non-cash or other purchase accounting
adjustments, to estimated adjusted EBITDA for the period indicated
below:
Financial Projections
For the Year Ended
December 31,
2018E
-----------------------
(USD in millions)
Net Income $ 1.6
Non-operating expense 0.4
Depreciation and amortization 5.2
Stock-based compensation 4.1
Restructuring and one-time expenses 0.6
Adjusted EBITDA 11.9
Basic EPS and Diluted EPS for Pareteum the pro forma year ending
31 December 2018 shown above, were calculated by dividing Total Net
Income above (of $1.8m) by 90,111,775 and 106,629,368 in respect of
Basic EPS and Diluted EPS respectively (being the relevant issued
share capital and fully diluted share capital figures,
respectively, for Pareteum as enlarged by the Acquisition).
1. Pareteum Standalone 2018 Profit Forecasts, Pareteum
Standalone Extended Profit Forecasts and Combined Projections (so
far as they relate to Pareteum)
Bases of preparation and principal assumptions
Each of the Pareteum Standalone 2018 Profit Forecasts, Pareteum
Standalone Extended Profit Forecasts and Combined Projections (so
far as they relate to Pareteum) (together, the "Pareteum
Forecasts"):
(a) has been properly compiled on the basis of the assumptions stated below and:
(i) in respect of the Pareteum Standalone 2018 Profit Forecasts
and Pareteum Standalone Extended Profit Forecasts, on a basis
consistent with the accounting policies of Pareteum and its
subsidiaries and subsidiary undertakings ("Pareteum Group") which
are in accordance with U.S. GAAP. These policies are consistent
with those applied in the preparation of the Pareteum Group's
annual results for the year ended 31 December 2017;
(ii) in respect of the Pareteum Standalone 2018 Profit
Forecasts, the forecasts were prepared by the Pareteum Directors
based on the three months unaudited results to 31 March 2018 and a
forecast of the results for the nine-month period ending 31
December 2018;
(iii) in respect of the Combined Projections (so far as they
relate to Pareteum) it was not appropriate to do so on a basis
consistent with the Pareteum Group's accounting policies / U.S.
GAAP - and to re-emphasise, they do not reflect estimated cost
synergies or non-cash or other purchase accounting adjustments;
(b) exclude any transaction costs applicable to the Acquisition
or any other associated accounting impacts as a direct result of
the Acquisition.
The Pareteum Forecasts are based on the following
assumptions:
Factors outside the influence or control of the Pareteum
Directors:
-- There will be no material changes to existing prevailing
macroeconomic or political conditions in the markets and regions in
which the Pareteum Group operates.
-- There will be no material changes to the conditions of the
markets and regions in which the Pareteum Group operates or in
relation to customer demand or the behaviour of competitors in
those markets and regions.
-- The interest, inflation and tax rates in the markets and
regions in which the Pareteum Group operates will remain materially
unchanged from the prevailing rates.
-- There will be no material adverse events that will have a
significant impact on Pareteum's financial performance.
-- There will be no business disruptions that materially affect
the Pareteum Group or its key customers, including natural
disasters, acts of terrorism, cyber-attack and/or technological
issues or supply chain disruptions.
-- There will be no material movements in foreign currency exchange rates.
-- There will be no material changes in legislation or
regulatory requirements impacting on the Pareteum Group's
operations or its accounting policies.
-- The proposed scheme of arrangement under Part 26 of the
Companies Act 2006 to effect the Acquisition ("Scheme") will not
result in any material changes to Pareteum's obligations to
customers.
-- The Scheme will not have any material impact on Pareteum's
ability to negotiate new business.
Factors within the influence and control of the Pareteum
Directors:
-- Pareteum's current and new contract negotiations will
conclude substantially as the Pareteum Directors would reasonably
expect based on the Pareteum Group's past experience.
-- There will be no material change to the present management of Pareteum.
-- There will be no material change in the operational strategy of the Pareteum Group.
-- There will be no material acquisitions or disposals.
-- There will be no material strategic investments over and above those currently planned.
-- The forecast excludes any impact of the Acquisition.
-- There will be no unexpected technical or network issues with products or process.
Pareteum Directors' confirmations
The Pareteum Directors have considered the Pareteum Standalone
Extended Profit Forecasts and Combined Projections (so far as they
relate to Pareteum) and confirm that they remain valid as at the
date of this announcement and have been properly compiled on the
basis of the assumptions set out above and that, in respect of the
Pareteum Standalone Extended Profit Forecasts, the basis of the
accounting used is consistent with Pareteum's accounting
policies.
The Pareteum Directors have considered the Artilium Forecasts
and confirm that the underlying projections (in Euros with a 30
June year-end) have been correctly calendarized to a 31 December
year-end and converted to U.S. Dollars at a rate of EUR1:US$
1.25.
Pareteum Profit Forecast on 7 May 2018
On 7 May 2018, Pareteum announced its first quarter 2018
results, which included the Pareteum Profit Forecast (as defined
and further detailed at Appendix IV of the Rule 2.7 Announcement
dated 7 June 2018) ("Superseded Pareteum Profit Forecast").
Pareteum is of the opinion that the Superseded Pareteum Profit
Forecast is now superseded by the Pareteum Standalone 2018 Profit
Forecasts.
Reports on the Pareteum Standalone 2018 Profit Forecasts
Reports on the Pareteum Standalone 2018 Profit Forecasts from
each of Squar Milner and Jefferies are set out below.
1A. Report from Squar Milner on the Pareteum Standalone 2018
Profit Forecasts
The Directors
Pareteum Corporation
1185 Avenue of the Americas
New York, New York 10036
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
6 August 2018
Dear Sirs
Pareteum Corporation
We report on the unaudited profit forecasts for Pareteum
Corporation (the "Company") on a standalone basis for the financial
year ending 31 December 2018 (the "Profit Forecasts"). The Profit
Forecasts and the material assumptions upon which they are based,
are set out on pages 45 to 46 of Pareteum's Proxy Statement dated 3
August 2018 (the "Proxy Statement") and reproduced in the Appendix
to the announcement dated 6 August 2018 (the "Announcement").
This report is required by Rule 28.1(a)(i) of the City Code on
Takeovers and Mergers issued by the Panel on Takeovers and Mergers
(the "City Code") and is given for the purpose of complying with
that Rule and for no other purpose. Accordingly, we assume no
responsibility in respect of this report to Artilium plc
("Artilium" or the "Offeree") or any other person connected to, or
acting in concert with, the Offeree.
Responsibilities
It is the responsibility of the directors of the Company (the
"Directors") to prepare the Profit Forecasts in accordance with the
requirements of the City Code.
It is our responsibility to form an opinion as required by Rule
28.1(a)(i) of the City Code as to the proper compilation of the
Profit Forecasts and to report that opinion to you.
This report is given solely for the purposes of complying with
Rule 28.1(a)(i) of the City Code and for no other purpose. Save for
any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by
law we do not assume any responsibility and will not accept any
liability to any other person for any loss suffered by any such
other person as a result of, arising out of, or in connection with
this report or our statement, required by and given solely for the
purposes of complying with Rule 23.2 of the City Code, consenting
to its inclusion in the Announcement.
Basis of Preparation of the Profit Forecasts
The Profit Forecasts have been prepared on the basis set out on
pages 45 to 46 of the Proxy Statement and as stated in the Appendix
to the Announcement. The Profit Forecasts are based on the
Company's three months unaudited results to 31 March 2018 and a
forecast of the results for the nine-month period ending 31
December 2018. The Profit Forecasts are required to be presented on
a basis consistent with the accounting policies of the Company.
Basis of Opinion
We conducted our work in accordance with the attestation
standards established by the American Institute of Certified Public
Accountants. Our work included evaluating the basis on which the
historical financial information included in the Profit Forecasts
has been prepared and considering whether the Profit Forecasts have
been accurately computed based upon the disclosed assumptions and
the accounting policies of the Company.
Whilst the assumptions upon which the Profit Forecasts are based
are solely the responsibility of the Directors, we considered
whether anything came to our attention to indicate that any of the
assumptions adopted by the Directors which, in our opinion, are
necessary for a proper understanding of the Profit Forecasts have
not been disclosed or if any material assumption made by the
Directors appears to us to be unrealistic.
We planned and performed our work so as to obtain the
information and explanations we considered necessary in order to
provide us with reasonable assurance that the Profit Forecasts have
been properly compiled on the basis stated.
Since the Profit Forecasts and the assumptions on which they are
based relate to the future and may therefore be affected by
unforeseen events, we can express no opinion as to whether the
actual results reported will correspond to those shown in the
Profit Forecasts and differences may be material.
Our work has not been carried out in accordance with auditing or
other standards and practices generally accepted in other
jurisdictions and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and
practices.
We have not consented to the inclusion of this report and our
opinion in any registration statement filed with the SEC under the
U.S. Securities Act of 1933 (either directly or by incorporation by
reference) or in any offering document enabling an offering of
securities in the United States (whether under Rule 144A or
otherwise). We therefore accept no responsibility to, and deny any
liability to, any person using this report and opinion in
connection with any offering of securities inside the United States
of America or who makes a claim on the basis they had acted in
reliance on the protections afforded by United States of America
law and regulation.
Opinion
In our opinion, the Profit Forecasts have been properly compiled
on the basis stated and the basis of accounting used is consistent
with the accounting policies of the Company.
Yours faithfully,
SQUAR MILNER LLP
Los Angeles, California
August 6, 2018
1B. Report from Jefferies on the Pareteum Standalone 2018 Profit
Forecasts
Pareteum Corporation
1185 Avenue of the Americas, 37th floor
New York, NY 10036
United States of America
6 August 2018
Dear Sirs / Madams,
Recommended acquisition of Artilium plc ("Artilium") by Pareteum
Corporation ("Pareteum" or the "Company") pursuant to a scheme of
arranagement
We refer to the profit forecasts made by Pareteum in respect of
Gross Profit, Adjusted EBITDA and Net Income on a standalone basis
for the financial year ending 31 December 2018 (the "Profit
Forecasts"), as set out on pages 45 to 46 of Pareteum's Proxy
Statement dated 3 August 2018 (the "Proxy Statement") and
reproduced in the announcement dated 6 August 2018 (the
"Announcement") for which the board of directors of Pareteum is
solely responsible under Rule 28.1of the City Code on Takeovers and
Mergers (the "City Code").
We have discussed the Profit Forecasts (including the
assumptions, bases of calculation and sources of information
referred to therein) with those officers and employees of Pareteum
who developed the underlying plans. The Profit Forecasts are
subject to uncertainty as described in the Proxy Statement and the
Announcement and our work did not involve an independent
examination of any of the financial or other information underlying
the Profit Forecasts.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by or on behalf of
the Company, or otherwise discussed with or reviewed by us, and we
have assumed such accuracy and completeness for the purposes of
providing this letter.
This letter is not an opinion regarding, and we express no view
as to, the reasonableness or achievability of the Profit
Forecasts.
We have also reviewed the work carried out by Squar Milner LLP
and have discussed with them the opinion set out in Part 1A of the
Appendix to the Announcement addressed to yourselves and ourselves
on this matter.
This letter is provided to you solely in connection with
Pareteum's potential acquisition of Artilium, in accordance with
Rule 28.1(a)(ii) of the City Code and for no other purpose. We
accept no responsibility to any person other than Pareteum in
respect of the contents of this letter; no person other than the
board of directors of Pareteum can rely on the contents of this
letter, and to the fullest extent permitted by law, we exclude all
liability (whether in contract, tort or otherwise) to any other
person, in respect of this letter, its contents or the work
undertaken in connection with this letter or any of the results
that can be derived from this letter or any written or oral
information provided in connection with this letter, and any such
liability is expressly disclaimed except to the extent that such
liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Profit
Forecasts, for which the board of directors of Pareteum is solely
responsible, have been prepared with due care and
consideration.
Yours faithfully
Jefferies International Limited
2. Quantified Financial Benefits Statements
Bases of belief and principal assumptions
In preparing the Quantified Financial Benefits Statements, a
working group comprising senior management from Pareteum (the
"Working Group") was established to evaluate and assess the
potential synergies available for the integration and undertake an
initial planning exercise. The Working Group has worked
collaboratively to identify and quantify potential synergies as
well as estimate any associated costs based on publicly available
information, certain operating and financial information provided
by Artilium and a series of meetings and/or calls with the key
management personnel of Artilium.
In circumstances where the information provided by Artilium has
been limited for commercial or other reasons, the Working Group has
made estimates and assumptions to aid its development of individual
synergy initiatives. The assessment and quantification of the
potential synergies have in turn been informed by Pareteum
management's industry experience as well as their experience of
executing and integrating past acquisitions.
The cost bases used as the basis for the Quantified Financial
Benefits Statements are those contained in the Pareteum Standalone
2018 Profit Forecasts and Artilium's cost forecasts for 2018, as
calendarized to December 31 and converted to U.S. Dollars. The
exchange rate used as the basis for the Quantified Financial
Benefits Statements is EUR1:US$ 1.25. The quantified synergies are
incremental to Pareteum's and to the best of Pareteum's knowledge,
Artilium's existing plans, and are expected to be recurring. It is
anticipated that the expected financial benefits will accrue as a
direct result of the success of the Acquisition and could not be
achieved independently of the Acquisition.
It is envisaged that the realisation of the identified synergies
will result in non-recurring integration costs of approximately
US$2.9m. Aside from the integration costs, no material
dis-synergies are expected in connection with the Acquisition.
The synergy assumptions in respect of Cost of Goods Sold were
risk adjusted by the Working Group, exercising a degree of prudence
in the calculation of the estimated synergy benefit set out
above.
The Quantified Financial Benefits Statements are based on the
following assumptions:
-- There will be no significant impact on the underlying
operations of either Pareteum or Artilium or the ability of either
business to win business from their customers.
-- There will be no material changes to existing prevailing
macroeconomic, political, regulatory or legal conditions in the
markets and regions in which either the Pareteum Group or Artilium
and its subsidiaries and subsidiary undertakings ("Artilium Group")
operate that will materially impact on the implementation or costs
to achieve the proposed cost savings.
-- There will be no material changes to the conditions of the
markets and regions in which the Pareteum or Artilium Groups
operate or in relation to customer demand or the behaviour of
competitors in those markets and regions.
-- The interest, inflation and tax rates in the markets and
regions in which the Pareteum or Artilium Groups operate will
remain materially unchanged from the prevailing rates.
-- There will be no material adverse events that will have a
significant impact on Pareteum's or Artilium's financial
performance.
-- There will be no material movements in foreign currency exchange rates.
-- There will be no material changes in legislation or
regulatory requirements impacting on the Pareteum or Artilium
Group's operations or their accounting policies.
-- Artilium will be de-listed from the London Stock Exchange.
Notes
1. These statements of estimated synergies relate to future
actions and circumstances which, by their nature, involve risks,
uncertainties and contingencies. In addition, there may be
additional changes to the operations of the combined group. As a
result, the estimated synergies referred to may not be achieved, or
may be achieved later or sooner than estimated, or those achieved
could be materially different from those estimated.
2. The Quantified Financial Benefits Statements should not be
construed as a profit forecast or interpreted to mean that the
combined group's earnings or earnings per share in the first full
year following completion of the Acquisition, or in any subsequent
period, would necessarily match or be greater than or be less than
those of Pareteum and/or Artilium for the relevant preceding
financial period or any other period.
3. For the purposes of Rule 28 of the Code, the Quantified
Financial Benefits Statements are the responsibility of the
Pareteum Directors.
Reports
Reports on the Quantified Financial Benefits Statements from
each of Squar Milner and Jefferies are set out below.
2A. Report from Squar Milner on the Quantified Financial
Benefits Statements
The Directors
Pareteum Corporation
1185 Avenue of the Americas
New York, New York 10036
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
6 August 2018
Dear Sirs
Pareteum Corporation
We refer to the statements regarding estimated cost synergies
arising from the acquisition of Artilium plc ("Artilium" or the
"Offeree") by Pareteum Corporation (the "Company") (the
"Statements") set out on page 46 of Pareteum's Proxy Statement
dated 3 August 2018 (the "Proxy Statement") and reproduced in the
Appendix to the announcement dated 6 August 2018 (the
"Announcement").
This report is required by Rule 28.1 (a)(i) of the City Code on
Takeovers and Mergers issued by the Panel on Takeovers and Mergers
(the "City Code") and is given for the purpose of complying with
that Rule and for no other purpose. Accordingly, we assume no
responsibility in respect of this report to Artilium or any other
person connected to, or acting in concert with, the Offeree.
Responsibilities
It is the responsibility of the directors of the Company (the
"Directors") to prepare the Statements in accordance with the
requirements of the City Code.
It is our responsibility to form an opinion as required by Rule
28.1(a)(i) of the City Code as to the proper compilation of the
Statements on the basis stated and to report that opinion to
you.
This report is given solely for the purposes of complying with
Rule 28.1(a)(i) of the City Code and for no other purpose. Save for
any responsibility which we may have to those persons to whom this
report is expressly addressed, to the fullest extent permitted by
law we do not assume any responsibility and will not accept any
liability to any other person for any loss suffered by any such
other person as a result of, arising out of, or in connection with
this report or our statement, required by and given solely for the
purposes of complying with Rule 23.2 of the City Code, consenting
to its inclusion in the Announcement.
Basis of Opinion
We conducted our work in accordance with the attestation
standards established by the American Institute of Certified Public
Accountants. Our work included considering whether the Statements
have been accurately computed based on the bases of belief
(including the principal assumptions). Whilst the bases of belief
(and the principal assumptions) upon which the Statements are based
are solely the responsibility of the Directors, we considered
whether anything came to our attention to indicate that any of the
bases of belief (or principal assumptions) adopted by the Directors
which, in our opinion, are necessary for a proper understanding of
the Statements have not been disclosed or if any basis of belief
(or principal assumption) made by the Directors appears to us to be
unrealistic. Our work did not involve any independent examination
of any of the financial or other information underlying the
Statements.
We planned and performed our work so as to obtain the
information and explanations we considered necessary in order to
provide us with reasonable assurance that the Statements have been
properly compiled on the basis stated.
Since the Statements and the assumptions on which they are based
relate to both pro forma historical and future periods and may also
be affected by unforeseen events, we can express no opinion as to
whether the actual synergy benefits achieved are likely to be
different from those anticipated in the Statements and differences
may be material. Accordingly, we can express no opinion as to the
achievability of the synergy benefits identified by the Directors
in the Statements.
Our work has not been carried out in accordance with auditing or
other standards and practices generally accepted in other
jurisdictions and accordingly should not be relied upon as if it
had been carried out in accordance with those standards and
practices.
We have not consented to the inclusion of this report and our
opinion in any registration statement filed with the SEC under the
U.S. Securities Act of 1933 (either directly or by incorporation by
reference) or in any offering document enabling an offering of
securities in the United States (whether under Rule 144A or
otherwise). We therefore accept no responsibility to, and deny any
liability to, any person using this report and opinion in
connection with any offering of securities inside the United States
of America or who makes a claim on the basis they had acted in
reliance on the protections afforded by United States of America
law and regulation.
Opinion
In our opinion, on the basis of the foregoing, the Statements
have been properly compiled on the basis stated.
Yours faithfully,
SQUAR MILNER LLP
Los Angeles, California
August 6, 2018
2B. Report from Jefferies on the Quantified Financial Benefits
Statements
Pareteum Corporation
1185 Avenue of the Americas, 37th floor
New York, NY 10036
United States of America
6 August 2018
Dear Sirs / Madams,
Recommended acquisition of Artilium plc ("Artilium") by Pareteum
Corporation ("Pareteum" or the "Company") pursuant to a scheme of
arranagement
We refer to the Quantified Finanical Benefit Statements
regarding cost synergies (the "Statements") made by Pareteum, as
set out on page 46 of Pareteum's Proxy Statement dated 3 August
2018 (the "Proxy Statement") and reproduced in the announcement
dated 6 August 2018 (the "Announcement") for which the board of
directors of Pareteum is solely responsible under Rule 28.1 of the
City Code on Takeovers and Mergers (the "City Code").
We have discussed the Statements (including the assumptions,
bases of calculation and sources of information referred to
therein) with those officers and employees of Pareteum who
developed the underlying plans. The Statements are subject to
uncertainty as described in the Proxy Statement and the
Announcement and our work did not involve an independent
examination of any of the financial or other information underlying
the Statements.
We have relied upon the accuracy and completeness of all the
financial and other information provided to us by or on behalf of
the Company, or otherwise discussed with or reviewed by us, and we
have assumed such accuracy and completeness for the purposes of
providing this letter.
We do not express any opinion as to the achievability of the
quantified financial benefits identified by Pareteum in the
Statements or otherwise.
We have also reviewed the work carried out by Squar Milner LLP
and have discussed with them the opinion set out in Part 2A of the
Appendix to the Announcement addressed to yourselves and ourselves
on this matter.
This letter is provided to you solely in connection with
Pareteum's potential acquisition of Artilium, in accordance with
Rule 28.1(a)(ii) of the City Code and for no other purpose. We
accept no responsibility to any person other than Pareteum in
respect of the contents of this letter; no person other than the
board of directors of Pareteum can rely on the contents of this
letter, and to the fullest extent permitted by law, we exclude all
liability (whether in contract, tort or otherwise) to any other
person, in respect of this letter, its contents or the work
undertaken in connection with this letter or any of the results
that can be derived from this letter or any written or oral
information provided in connection with this letter, and any such
liability is expressly disclaimed except to the extent that such
liability cannot be excluded by law.
On the basis of the foregoing, we consider that the Statements,
for which the board of directors of Pareteum is solely responsible,
have been prepared with due care and consideration.
Yours faithfully
Jefferies International Limited
3. Artilium Standalone Profit Forecasts and Combined Projections
(so far as they relate to Artilium)
Bases of preparation and principal assumptions
Each of the Artilium Standalone Profit Forecasts and Combined
Projections (so far as they relate to Artilium) (together, the
"Artilium Forecasts"):
(a) has been properly compiled on the basis of the assumptions stated below and:
(i) in respect of the Artilium Standalone Profit Forecasts, on a
basis consistent with the Artilium Group's accounting policies
which are in accordance with IFRS. These policies are consistent
with those applied in the preparation of the Artilium Group's
annual results for the year ended 30 June 2017;
(ii) in respect of the Combined Projections (so far as they
relate to Artilium) it was not appropriate to do so on a basis
consistent with the Artilium Group's accounting policies / IFRS -
and to re-emphasise, they do not reflect estimated cost synergies
or non-cash or other purchase accounting adjustments;
(b) exclude any transaction costs applicable to the Acquisition
or any other associated accounting impacts as a direct result of
the Acquisition;
(c) have been calendarized to December 31 and converted to U.S.
Dollars at a rate of EUR1:US$ 1.25.
The Artilium Forecasts are based on the following
assumptions:
Factors outside the influence or control of the directors of
Artilium ("Artilium Directors"):
-- There will be no material changes to existing prevailing
macroeconomic or political conditions in the markets and regions in
which the Artilium Group operates.
-- There will be no material changes to the conditions of the
markets and regions in which the Artilium Group operates or in
relation to customer demand or the behaviour of competitors in
those markets and regions.
-- The interest, inflation and tax rates in the markets and
regions in which the Artilium Group operates will remain materially
unchanged from the prevailing rates.
-- There will be no material adverse events that will have a
significant impact on Artilium's financial performance.
-- There will be no business disruptions that materially affect
the Artilium Group or its key customers, including natural
disasters, acts of terrorism, cyber-attack and/or technological
issues or supply chain disruptions.
-- There will be no material movements in foreign currency exchange rates.
-- There will be no material changes in legislation or
regulatory requirements impacting on the Artilium Group's
operations or its accounting policies.
-- The Scheme will not result in any material changes to Artilium's obligations to customers.
-- The Scheme will not have any material impact on Artilium's
ability to negotiate new business.
Factors within the influence and control of the Artilium
Directors:
-- Artilium's current and new contract negotiations will
conclude substantially as the Artilium Directors would reasonably
expect based on the Artilium Group's past experience.
-- There will be no material change to the present management of Artilium.
-- There will be no material change in the operational strategy of the Artilium Group.
-- There will be no material acquisitions or disposals.
-- There will be no material strategic investments over and above those currently planned.
-- The forecast excludes any impact of the Acquisition.
-- There will be no unexpected technical or network issues with products or process.
Artilium Directors' confirmations
The Artilium Directors have considered the Artilium Forecasts
and confirm that the underlying projections (in Euros with a 30
June year-end) remain valid as at the date of this announcement and
have been properly compiled on the basis of the assumptions set out
above and that, in respect of the Artilium Standalone Profit
Forecasts, the basis of the accounting used is consistent with
Artilium's accounting policies.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
OUPUGUMWRUPRGWC
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