Vancouver, B.C. September 7, 2018 – RSI International Systems Inc. (TSX-V: RSY) (“RSI” or the “Company”) is pleased to report that it has signed a binding Letter of Intent (“LOI”) with nSight Inc., for the sale of RSI’s RoomKeyPMS business and assets for gross proceeds of US$4.6m in cash, before any applicable adjustments. The parties are at arm’s length. Assuming the 7-day average of the most recently posted Bank of Canada US$/C$ exchange rates of 1.3188 and the Company’s 36,835,278 issued and outstanding shares, this translates to approximately C$6m, or just over C$0.16 per share, before any adjustments. RSI’s shares lasted traded on the TSX-V at C$0.04.
Mr. David Keys, Chairman of the RSI Board of Directors and a representative for the Ernest W. Moody Revocable Trust, which holds 44.4% of RSI’s outstanding shares, commented, “We have been frustrated for some time with the quoted market value of RSI shares. The cash consideration being offered for the RoomKey business is about four RSI’s market capitalization based on the last closing price, and the funds available after we settle any liabilities will allow us to look at ways to better return value to our shareholders. This may include acquiring another business or distributing part or all of the net proceeds”.
nSight CEO, Rich Maradik, added “We look forward to working with both the RoomKey team and customers as we build out a full portfolio of hospitality technology solutions. We expect to keep the RoomKey team largely intact, so that we can best serve the existing customers and grow the business. We see strong demand from the middle market hotel segment for an innovative technology partner offering a fully integrated platform allowing for unified processes. This will allow customers using our technology to streamline costs while optimizing RevPar.”
Under the terms of the LOI, nSight will pay RSI gross proceeds of US$4.6m, for the Company’s current business and assets related to the development and operation of RSI’s RoomKeyPMS. This figure will be adjusted to account for the timing of certain receivables, payables, deferred revenue, prepaid costs and other items that are assumed by nSight. RSI may also incur some costs related to the disposal of its RoomKey business for certain contractual obligations. The US-dollar figure will be converted to Canadian dollars by averaging the posted Bank of Canada closing US$/C$ exchange rate for the seven days preceding the LOI date of September 7, 2018, and the same exchange rate for the seven days preceding the closing of the transaction. Should the exchange rate move more than five percentage points in either direction, the disadvantaged party will have the option to terminate the transaction
With the LOI in place, RSI and nSight will work towards negotiating a Definitive Agreement within 60 days, to replace the binding LOI. The Definitive Agreement will contain an RSI Non-Compete provision as well as a provision that RSI will not solicit any alternative transactions, and that should the Company terminate the Definitive Agreement, as the result of accepting a third-party acquisition proposal, nSight will be entitled to a break-fee of US$460,000. The transaction is subject to a number of conditions, including completion of satisfactory due diligence, the entering into of definitive documentation and the receipt of all necessary regulatory and third-party approvals and consents, including approval by RSI shareholders.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
With the acquisition of RSI, nSight will rapidly assemble a full portfolio of hospitality technology solutions to accelerate growth in the middle market hotel segment. Currently, nSight Inc. provides predictive data and marketing solutions for hotels and destinations helping deliver incremental revenue through improving their pricing and marketing practices.
RSI International Systems Inc. is the developer of RoomKeyPMS, a web-based Property Management System (PMS) that incorporates a fully integrated Online Reservation Booking engine and seamless real-time connectivity to the major Global Distribution and Internet Distribution Systems. RSI markets its RoomKeyPMS and a number of other proprietary “hosted” software solutions to a wide variety of Hospitality Industry clients around the world. For more information, please see our website at www.roomkeypms.com
Cautionary Note Regarding Forward Looking Statements
This news release contains forward-looking statements. Any statements that are not strictly historical fact are considered “forward-looking statements.” Forward-looking statements cannot be guaranteed and involve assumptions and are subject to a variety of risks and uncertainties which could cause actual events or results to materially differ from those reflected in the forward-looking statements. Readers are advised to rely on their own evaluation of such risks and uncertainties and not place undue reliance upon forward-looking statements. Any forward-looking statements made herein are made as of the date hereof, and the Company assumes no obligation and disclaims any intention to revise or update any forward-looking information and statements except as required by applicable laws.
For more information, please contact:
RSI Systems International Inc.
Tim Major, President & CEO