Proposed Arrangement Does Not Provide Fair
Value to Shareholders
Offer Price Ignores Payfare's Long-Term Growth
Potential and Value of Potential Synergies
Proposed Sale Disproportionately Benefits
Insiders at the Expense of Shareholders
TORTOLA, British Virgin Islands, Feb. 11,
2025 /CNW/ - Kingsferry Capital Management Group
Limited, which beneficially owns, controls or directs approximately
10.6% of the issued and outstanding common shares of Payfare Inc.
(TSX: PAY) ("Payfare" or the "Company"),
today issued an open letter to fellow shareholders of Payfare,
urging them to vote against the proposed acquisition of all of the
issued and outstanding shares of the Company by 1517452 B.C. Ltd., a subsidiary of Fiserv, Inc.,
at the Company's upcoming Special Meeting of Shareholders to be
held on February 21, 2025.
The full text of the letter is set forth below:
Dear Fellow Payfare Shareholders,
Kingsferry Capital Management Group Limited
("Kingsferry") is a significant and long-term shareholder of
Payfare Inc. ("Payfare" or the "Company")
that beneficially owns, controls or directs 5,096,756 common shares
of Payfare ("Shares"), representing approximately 10.6% of
the Company's issued and outstanding Shares, as at the date
hereof.
We believe that the current offer by 1517452
B.C. Ltd., a subsidiary of Fiserv, Inc. ("Fiserv"),
to acquire all of the issued and outstanding Shares at a price of
C$4.00 per Share under the proposed
plan of arrangement (the "Arrangement") grossly undervalues
the Company and prioritizes insider gains over the interests of
Payfare's shareholders ("Shareholders") and the interests of
the Company.
We have formally expressed our concerns to Payfare's Board of
Directors (the "Board") and the Special Committee of the
Board, notifying them of our intent to vote against the Arrangement
at the Company's upcoming Special Meeting of Shareholders to be
held on February 21, 2025 (the
"Meeting"). We are now urging our fellow Shareholders to do
the same for the reasons outlined below:
Inadequate consideration despite premium claims: The
Company's claim of a "significant premium" is misleading, as it is
based on a deeply distressed stock price that was nearly equal to
the aggregate of Payfare's cash and cash equivalents, investments
and loan receivables from related parties – far below the Company's
intrinsic value.
Significant undervaluation of future potential: In the most
recent earnings call, management highlighted three new pipeline
opportunities, which could fully offset lost Gross Dollar Volume.
However, these opportunities appear to be excluded from the
financial forecasts used to justify the Arrangement and management
has not provided any updates on their progress, leaving
Shareholders to vote without full transparency on these material
growth prospects.
Substantial synergies not reflected in the Arrangement's
price: The offer price fails to consider critical synergies,
including Payfare's fraud detection and mitigation
system, which could deliver significant benefits to Fiserv's Money
Network and other card programs that have been struggling with
fraud issues as reported by the media and the Auditor
of the State of California.
Additionally, further cost synergies could be realized by
insourcing Payfare's issuer processing through Fiserv's
infrastructure.
Conflicts of interest among insiders: If the Arrangement is
approved, directors and executives (collectively holding
approximately 11.3% of the issued and outstanding Shares) are set
to benefit from millions of dollars in accelerated vesting of
restricted share units ("RSUs"), change-of-control payouts,
debt forgiveness to certain directors, and lucrative employment
contracts. Notably, on November 7,
2024, while Payfare was conducting a strategic review
process that involved discussions with third-parties about a
possible business combination, and just four days before Payfare
received indications of interest from Fiserv and another
third-party on November 11, 2024, the
Board approved the grant of 1,081,098 RSUs to certain insiders of
the Company. These RSUs were subsequently granted on November 11, 2024 and November 22, 2024. The timing of the RSU grants
raises serious questions about their purpose and highlights a
concerning misalignment of priorities.
In conclusion, we believe the intrinsic value of Payfare far
exceeds C$4.00 per Share, and that
the Arrangement appears to be rushed and opportunistic,
prioritizing insider incentives at the expense of the interests of
Shareholders and the Company. We strongly encourage all
Shareholders to vote AGAINST the Arrangement before the
proxy cut-off at 11:00 a.m.
(Toronto time) on February 19, 2025 (or at least 48 hours
(excluding Saturdays, Sundays and holidays) before the time of the
Meeting or any adjournment or postponement thereof).
Sincerely,
Hugo Chan
Director
Kingsferry Capital Management Group
Limited
Additional Information
Kingsferry is relying on the exemption under section 9.2(4) of
National Instrument 51‐102 ‐ Continuous Disclosure
Obligations to make this public broadcast solicitation. The
following information is provided in accordance with corporate and
securities laws applicable to public broadcast solicitations.
This news release and any solicitation made by the Kingsferry in
advance of the Meeting is, or will be, as applicable, made by
Kingsferry and not by or on behalf of the management of the
Company.
Kingsferry may solicit proxies in reliance upon the public
broadcast exemption to the solicitation requirements under
applicable law, conveyed by way of public broadcast, including
through press releases, speeches or publications, and by any other
manner permitted under applicable law. Proxies may also be
solicited by Kingsferry pursuant to an information circular sent to
Shareholders after which solicitations may be made by or on behalf
of Kingsferry by mail, telephone, fax, email or other electronic
means as well as by newspaper or other media advertising, and in
person by directors, officers and employees of Kingsferry, who will
not be specifically remunerated therefor. Kingsferry may engage the
services of one or more agents and authorize other persons to
assist in soliciting proxies on behalf of Kingsferry.
All costs incurred for any solicitation will be borne by
Kingsferry, provided that, subject to applicable law, Kingsferry
may seek reimbursement from the Company of Kingsferry's
out-of-pocket expenses, including proxy solicitation expenses and
legal fees, incurred in connection therewith.
A registered Shareholder of the Company that has given a proxy
may revoke it by depositing an instrument in writing executed by
such registered Shareholder or his or her legal representative
authorized in writing or, where such registered Shareholder is a
corporation, by the corporation or a representative of the
corporation. To be valid, an instrument of revocation must be
received by the Chief Financial Officer & Corporate Secretary
of Payfare at any time up to and including the last business
preceding the day of the Meeting, or in the case of any
postponement or adjournment of the Meeting, the last business day
preceding the day of the postponed or adjourned Meeting, or
delivered to the Chair of the Meeting on the day fixed for the
Meeting, and prior to the start of the Meeting or any postponement
or adjournment thereof at the following address:
Payfare Inc.
73 Richmond Street West
Suite PH# 2
Toronto, Ontario M5H 4E8
Attention: Charles Park, Chief Financial Officer & Corporate
Secretary
A registered Shareholder may also revoke a proxy in any other
manner permitted by law. A registered Shareholder may also
revoke any previously submitted proxies by voting on a ballot at
the Meeting or in any other manner permitted by law. Only
registered Shareholders have the right to revoke a proxy. A
beneficial Shareholder who wishes to change their vote must arrange
for its respective intermediaries to change its vote prior to the
Meeting and, if necessary, revoke such beneficial Shareholder's
proxy in accordance with the revocation procedures described in the
Company's management information circular in connection with the
Meeting.
Based on publicly available information, and to the knowledge of
Kingsferry, the Company's head office is located at 73 Richmond
Street West, Suite PH# 2, Toronto,
Ontario M5H 4E8 and its registered address is 50 Burrard
Street, Suite 2300, Vancouver, British
Columbia V6C 2B5. A copy of this news release may be
obtained on the Company's profile on SEDAR+ at
www.sedarplus.ca.
Cautionary Statement Regarding Forward-Looking
Statements
This news release contains forward-looking information within
the meaning of applicable securities laws. In general,
forward-looking information refers to disclosure about future
conditions, courses of action, and events. All statements contained
in this press release that are not clearly historical in nature or
that necessarily depend on future events are forward‐looking, and
the use of any of the words "anticipates", "believes", "expects",
"intends", "plans", "will", "would", and similar expressions are
intended to identify forward-looking statements. These statements
are based on current expectations of Kingsferry and currently
available information.
Forward-looking statements are not guarantees of future
performance, involve certain risks and uncertainties that are
difficult to predict, and are based upon assumptions as to future
events that may not prove to be accurate. Kingsferry undertakes no
obligation to update publicly or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise, except as required by applicable securities
legislation.
Information Relating to Early Warning Requirements
This news release is also being issued pursuant to National
Instrument 62-103 - The Early Warning System and Related
Take-Over Bid and Insider Reporting Issues ("NI
62-103"). The Shares beneficially owned, controlled or directed
by Kingsferry were initially acquired for investment purposes.
However, Kingsferry today publicly announced that it intends to
oppose the Arrangement and encourage other Shareholders of the
Company to vote against the Arrangement at the Meeting. An early
warning report in connection with this news release will be filed
under the Company's profile on SEDAR+ at www.sedarplus.ca. To
obtain a copy of the early warning report, please contact
Kingsferry at the address below.
SOURCE Kingsferry Capital Management Group Limited
