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Pipeline Data Signs Letter of Intent With ComVest Private Equity Firm to Be Exclusive Payment Processor of COCARD(R), Receive $3 Million Capital Infusion and Have a Call Option to Acquire COCARD Business

September 30, 2008

Pipeline Data Inc. (OTCBB: PPDA) (“Pipeline”), a provider of payment processing solutions and services, announced today that it has entered into a non-binding letter of intent (the “LOI”) with ComVest Investment Partners III L.P., an affiliate of ComVest Investment Partners, a West Palm Beach-based private equity firm (collectively, “ComVest”). The LOI provides for the potential completion of various transactions (the “Transactions”) between Pipeline and a newly formed ComVest related entity (“Newco”).

Newco is currently in the process of working to complete the acquisition of COCARD(R) Marketing Group, LLC, a leading retail merchant credit card processing company (“COCARD”).

The LOI provides that, subject to the completion of definitive documentation satisfactory to both Pipeline and ComVest, Pipeline would act as the exclusive payment processor for all future merchant credit card transactions made through the COCARD network.

The LOI envisions that Newco would grant Pipeline the unilateral option to acquire all of the assets and liabilities of Newco or the capital stock of Newco in the future. The option would be exercisable by Pipeline in its sole discretion in exchange for newly issued Pipeline preferred stock representing a significant controlling ownership interest in Pipeline (the “Call Option”). The preferred stock issued in connection with the Call Option would have a 2.0x liquidation preference, be convertible into Pipeline common stock, and have a 16% annual compounding PIK, but would not pay any dividends. The Pipeline Call would be exercisable for a six-month period after any restructuring approved by Pipeline’s outstanding senior noteholders, or on or before July 10, 2011 if such restructuring does not occur.

Newco would also provide Pipeline with $3 million of capital and would directly purchase Pipeline’s current $15.2 million put liability to Greg and David Danzig (the “Danzig Put”). If the Transactions are completed, Newco would acquire the Danzig Put and the maturity date of the Danzig Put would be extended until potentially as long as July 10, 2011, although earlier repayment could be triggered under certain circumstances.

All of the Transactions would be completed in full compliance with Pipeline’s existing third party contracts and obligations, including the covenants and requirements of Pipeline’s senior loan documents and the related warrants.

MacAllister Smith, Pipeline Data’s chief executive officer, stated, “Pipeline Data is excited about the potential benefits of these transactions with ComVest. Not only would they offer Pipeline the opportunity to generate new business through the exclusive COCARD ISO arrangement, but they also have the potential to significantly improve Pipeline’s short-term liquidity and financial position through a material capital infusion. On a long-term basis, they would give Pipeline a valuable unilateral option to combine itself with Newco. Given the amount of capital and the depth and quality of management that ComVest plans to invest to establish Newco and make the COCARD acquisition, we feel that the option could give our shareholders a unique ability to share in the upside of the Newco venture. We look forward to successfully finalizing our negotiations promptly and announcing the completion of these transactions.”

About Pipeline Data:

Pipeline Data Inc. provides value-added credit card transaction processing services for merchants in three key areas: wireless mobile payment, e-commerce solutions and retail merchant payment.

Safe Harbor Statement:

The information provided for in this Press Release contains forward-looking statements that involve risks and uncertainties more fully set forth in the Company’s filing. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this press release contains statements that are forward-looking, such as statements relating to uncertainties that could affect performance and results of the Company in the future and, accordingly, such performance and results may materially differ from those expressed or implied in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to those relating to the Company’s growth strategy, customer concentration, outstanding indebtedness, seasonality, expansion and other activities of competitors, changes in federal or state laws and the administration of such laws, protection of the securities markets and other risks detailed in the Company’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Statements made in this Press Release that are not historical facts are forward-looking statements that are subject to the “safe harbor” created by the Private Securities Litigation Reform Act of 1995. The Company’s actual results could differ significantly from those discussed and/or implied herein.




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