EZCORP Forms Global Strategic Alliance with Cash Converters
AUSTIN, Texas, March 21, 2011 / PRNewswire / – EZCORP, Inc. (Nasdaq: EZPW) today announced that it has entered into an agreement 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 part of the strategic alliance, EZCORP proposes to acquire from existing shareholders of Cash Converters approximately 76.6 million shares of Cash Converters for a price of AUS $ 0.91 per share (approximately US $ 69.5 million generally). Ownership of these shares, combined with EZCORP’s current 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 additional shares, is subject to the approval of the shareholders of Cash Converters and the Supreme Court of Western Australia, as well as regulatory and other conditions.
Cash Converters owns and franchises retail stores, which buy and sell used goods. Cash Converters and some of its franchisees also offer short-term consumer loans, available through its network of stores 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 UK, and has successfully acquired franchise stores in both territories in recent years.
Advantages of the operation
EZCORP and Cash Converters have identified the following advantages of the strategic alliance:
- Global deployment of integrated financial services solutions under the Cash Converters brand;
- Potential for faster growth in more geographies by leveraging the respective expertise of the two companies in acquisition, creation and franchise;
- Access to each company’s product suite and associated intellectual property for launch in existing and new territories;
- Elimination of costs and redundant efforts in the design, testing and introduction of new products;
- Efficient use and sharing of complementary operational and marketing expertise; and
- Higher returns on investment in new products and systems through greater scale.
Paul Rothamel, President and CEO of EZCORP, said: “Since EZCORP’s first investment in Cash Converters approximately 16 months ago, we have grown increasingly impressed with the Cash Converters business model. Cash Converters is a great brand and has already recognized it in 21 countries accelerates our long-term strategic goal of being a global provider of integrated financial solutions for our clients. “
Rothamel continued, “Cash Converters’ buy / sell model and its innovative lending products will complement our current product offerings, provide additional financial solutions to our existing customers and allow us to reach a wider range of customers across the board. more countries. We look forward to working with the entire Cash Converters team to build and grow our strategic alliance. “
Pierre Cumins, Managing Director of Cash Converters, said: “In just 16 months, EZCORP has proven to be a great partner for Cash Converters. By giving us access to the financial resources, management expertise and systems of EZCORP, this alliance 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 create two joint ventures:
- A joint venture will develop opportunities outside of Australia, the UK, North America and South America, and will be owned equally by EZCORP and Cash Converters.
- The other joint venture will focus on opportunities in the North and South America, of which 80% is held by EZCORP and the remaining 20% by Cash Converters.
EZCORP will continue to operate its existing activities in North America, and Cash Converters will continue to operate its existing business in Australia and the UK. Both companies will have the right to pursue other business opportunities in any geographic area, provided that company does not use any of the assets or rights held by the joint ventures.
Cash Converters will bring the rights to its brand, as well as the existing franchise rights in the affected territories, and EZCORP will bring US $ 3 million initial working capital. Subsequently, capital contributions will be made and the profits will be shared by the parties in accordance with the ownership of the joint venture.
Each joint venture will be governed by a board of directors composed of representatives of the EZCORP and Cash Converters organizations. The management of each joint venture will be responsible for deploying a range of integrated financial products and services, country by country, region by region, under the Cash Converters brand. Joint ventures will be able to choose from the current and future product offerings of EZCORP and Cash Converters and deploy the best expertise and systems among the partners. The deployment strategy could include entirely new operations, franchising of new operations, buyout of existing franchises and acquisitions of third-party businesses.
The acquisition by EZCORP of a controlling interest in Cash Converters must be effected in accordance with a Scheme of Arrangement, which is conditional on the approval of at least 50% (by number) of the shareholders of Cash Converters (other than EZCORP ) present in person or by proxy. at the plan meeting and also by at least 75% of the votes cast at this meeting by these shareholders. After shareholder approval, the plan must be approved 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 2011.
EZCORP is a leading provider of specialized financial services to consumers. It provides secured non-recourse loans, commonly known as pawn shops, and a variety of short-term consumer loans, including payday loans, installment loans and auto title loans, or paid credit services. to clients seeking loans. In its pawn shops, the company also sells commodities, mainly collateral forfeited during its pawn shops.
EZCORP operates more than 1,000 stores, including more than 500 pawn shops in the United States and Mexico and over 500 short-term consumer loan stores in the United States and Canada. The company also has significant investments in Albemarle & Bond Holdings PLC (ABM.L), one of the UK’s largest pawn shops with more than 130 stores, and Cash Converters International Limited (CCV.L and CCV.AUS), which franchises and operates a global network of more than 500 stores that provide financial services and sell second-hand merchandise.
Special Note Regarding Forward-Looking Statements
This announcement contains certain forward-looking statements regarding EZCORP’s plans and strategy, including EZCORP’s expectations regarding the proposed strategic alliance with Cash Converters. These statements are based on EZCORP’s current expectations. Actual results for future periods may differ materially from those expressed or implied by such forward-looking statements due to a number of uncertainties and other factors, including changes in market conditions throughout the world. economy and industry, consumer demand for EZCORP’s products and services, as well as the products and services to be offered by joint ventures with Cash Converters, and changes in the regulatory environment. For a discussion of various factors affecting the business and prospects of EZCORP, see EZCORP’s annual, quarterly and other reports filed with the Securities and Exchange Commission.
EZCORP Investor Relations
SOURCE EZCORP, Inc.