AUSTIN, TEXAS – ESW Capital, LLC is writing to Redknee Solutions, Inc. (“Redknee”) (“RKN” on the Toronto Stock Exchange) stakeholders with the goal of providing clarity and comfort that the funds for Redknee’s announced strategic restructuring can and will be raised. Redknee first announced plans for this restructuring with its First Quarter Fiscal 2017 earnings press release on February 8th, 2017. Further details around this strategic plan were announced in a release on February 23rd, 2017.
ESW Capital, LLC, via its affiliate Wave Systems, Corp., has provided the Redknee Board with two offers that should give all stakeholders, especially Redknee’s customers, certainty that these restructuring funds can be raised.
The first offer commits to a full backstop of an equity rights offering sufficient to fund the needed restructuring. The terms of the offer are substantially that Redknee would
Launch a rights offering, fully backstopped by ESW, with aggregate gross proceeds of approximately US$54 million at a subscription price per right of US$0.50
Use the funds for restructuring of the business
Enter into long-term shared services agreements with ESW affiliates Crossover Markets, Inc. and DevFactory FZ-LLC
Grant ESW a Warrant to purchase 5,000,000 common shares at a price of US$0.50 per share in consideration for the full backstop
This first offer would result in a dilution of approximately 113,000,000 additional shares.
The outline of a second offer was additionally provided based on feedback from the Redknee Board. This offer commits to a full backstop of an equity rights offering sufficient to both fund the needed restructuring AND redeem the Series A Preferred Stock. The terms of the offer are substantially that Redknee would
Launch a rights offering, fully backstopped by ESW, with aggregate gross proceeds of US$140 million at a subscription price per right between US$0.50 and US$0.70, at Redknee’s election
Use the funds for restructuring of the business and to fully redeem the Series A Preferred Stock
Guarantee ESW a minimum subscription of 25% of the non-ESW affiliated rights
Grant ESW a Warrant package of US$60 million priced at the rights offering price
Remove the 4 Preferred Directors as a part of redeeming the Series A Preferred Stock, but also grant ESW 1-2 board seats in addition to those it may already be entitled to
This second offer would result in a dilution of approximately 300,000,000 to 400,000,000 additional shares depending on the pricing election.
We respect that this matter is in the hands of the 3 independent directors elected by the common shareholders to decide. We simply encourage them to take swift, decisive action that is clearly required to preserve value for all stakeholders (customers, shareholders, and employees alike).
About ESW Capital, LLC
Based in Austin, Texas, the ESW Capital group (www.eswcapital.com) focuses on buying, strengthening, and growing mature business software companies. By taking advantage of its unique operating platform, ESW revitalizes its acquisitions for sustainable success while making customer satisfaction a top priority. ESW has been in the enterprise software space since 1988, and the group includes notable brands such as Aurea, Ignite Technologies, Trilogy, and Versata.
Source: ESW Capital, LLC