AUSTIN, Texas, March 21, 2011 /PRNewswire/ -- EZCORP, Inc.
(Nasdaq: EZPW) announced today that it has agreed with Cash
Converters International Limited to enter into a global strategic
alliance to develop and introduce a suite of innovative financial
services products under the "Cash Converters" brand. As a
part of the strategic alliance, EZCORP is proposing to acquire from
existing Cash Converters shareholders approximately 76.6 million
Cash Converters shares for a price of AUS $0.91 per share (approximately US $69.5 million in aggregate). Ownership of
these shares, when combined with EZCORP's existing ownership of
124.4 million Cash Converters shares, would give EZCORP a
controlling interest of approximately 53%. Completion of the
proposed transaction, including the acquisition of the additional
shares, is subject to approval by Cash Converters' shareholders and
the Supreme Court of Western
Australia, as well as regulatory and other conditions.
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Cash Converters is an owner and franchisor of retail stores,
which buy and sell second-hand goods. Cash Converters and
certain of its franchisees also offer short-term consumer loans,
which are available through its store network and online.
Including franchisees, there are over 600 stores operating
under the Cash Converters brand in 21 countries. Cash
Converters owns and operates 41 stores in Australia and 42 stores in the U.K., and has
been successfully repurchasing franchisee stores in both
territories in recent years.
Benefits of the Transaction
EZCORP and Cash Converters have identified the following
benefits of the strategic alliance:
- Global roll-out of integrated financial services solutions
under the Cash Converters brand;
- Potential for faster growth in more geographies by leveraging
the respective acquisition, greenfield and franchise expertise of
the two companies;
- Access to each company's suite of products and associated
intellectual property for launch in existing and new
territories;
- Elimination of duplicative cost and effort in the design,
testing and introduction of new products;
- Effective utilization and sharing of complementary operational
and marketing expertise; and
- Higher returns on new product and systems investment through
greater scale.
Paul Rothamel, President and
Chief Executive Officer of EZCORP, stated: "Since EZCORP's
first investment in Cash Converters approximately 16 months ago, we
have become increasingly impressed with Cash Converters' business
model. Cash Converters is a great brand, and having it
already recognized in 21 countries accelerates our long-term
strategic goal of being a global provider of integrated financial
solutions to our customer demographic."
Rothamel continued: "Cash Converters' buy/sell model and
its innovative loan products will complement our current product
offerings, will provide additional financial solutions for our
existing customers and will allow us to reach a broader range of
customers in more countries. We look forward to working with
the entire Cash Converters team to build and grow our strategic
alliance."
Peter Cumins, Managing Director
of Cash Converters, said: "In only 16 months, EZCORP has
proven to be a great partner for Cash Converters. By giving
us access to EZCORP's financial resources, management expertise and
systems, this alliance both expands and accelerates our strategic
growth plan, opening up many new opportunities for Cash
Converters."
Formation of Global Joint Ventures
If the transaction is approved, EZCORP and Cash Converters will
establish two joint ventures:
- One joint venture will develop opportunities outside of
Australia, the United Kingdom, North America and South America, and will be owned equally by
EZCORP and Cash Converters.
- The other joint venture will focus on opportunities in North
and South America, with 80% owned
by EZCORP and the remaining 20% owned by Cash Converters.
EZCORP will continue to operate its existing businesses in
North America, and Cash Converters
will continue to operate its existing businesses in Australia and the United Kingdom. Both companies will have
the right to pursue other business opportunities in any geography,
so long as that business does not use any of the assets or rights
owned by the joint ventures.
Cash Converters will contribute rights to its brand, as well as
existing franchise rights in the relevant territories, and EZCORP
will contribute US $3 million of
initial working capital. Thereafter, capital contributions
will be made, and profits shared, by the parties in line with joint
venture ownership.
Each joint venture will be governed by a board of directors with
representatives from both the EZCORP and Cash Converters
organizations. Management of each joint venture will have a
mandate to roll out a suite of integrated financial products and
services, country-by-country, region-by-region, under the Cash
Converters brand. The joint ventures will be able to select
from the current and future product offerings of EZCORP and Cash
Converters and deploy the best expertise and systems from among the
partners. The roll-out strategy could include greenfield
operations, franchising new operations, repurchase of existing
franchises and acquisitions of third-party businesses.
Other Information
EZCORP's acquisition of a controlling interest in Cash
Converters is to be effected pursuant to a Scheme of Arrangement,
which is conditional upon approval by at least 50% (by number) of
the Cash Converters shareholders (other than EZCORP) present in
person or by proxy at the scheme meeting and also by at least 75%
of the votes cast at that meeting by such shareholders.
Following shareholder approval, the scheme requires approval
by the Supreme Court of Western
Australia, and is also subject to regulatory and other
conditions. If approved, the transaction is expected to close
early in the second half of calendar 2011.
About EZCORP
EZCORP is a leading provider of specialty consumer financial
services. It provides collateralized non-recourse loans,
commonly known as pawn loans, and a variety of short-term consumer
loans, including payday loans, installment loans and auto title
loans, or fee-based credit services to customers seeking loans.
At its pawn stores, the company also sells merchandise,
primarily collateral forfeited from its pawn lending
operations.
EZCORP operates more than 1,000 stores, including over 500 pawn
stores in the U.S. and Mexico and
over 500 short-term consumer loan stores in the U.S. and
Canada. The company also has
significant investments in Albemarle & Bond Holdings PLC
(ABM.L), one of the U.K.'s largest pawnbroking businesses with over
130 stores, and Cash Converters International Limited (CCV.L and
CCV.AUS), which franchises and operates a worldwide network of over
500 stores that provide financial services and sell pre-owned
merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements
regarding EZCORP's plans and strategy, including EZCORP's
expectations for the proposed strategic alliance with Cash
Converters. These statements are based on EZCORP's current
expectations. Actual results in future periods may differ
materially from those expressed or implied by these forward-looking
statements due to a number of uncertainties and other factors,
including changing market conditions in the overall economy and the
industry, consumer demand for EZCORP's products and services, as
well as the products and services to be offered by the joint
ventures with Cash Converters, and changes in the regulatory
environment. For a discussion of various factors affecting
EZCORP's business and prospects, see EZCORP's annual, quarterly and
other reports filed with the Securities and Exchange
Commission.
EZCORP Investor Relations
(512) 314-2220
investor_relations@ezcorp.com
SOURCE EZCORP, Inc.