/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED
STATES/
VSS, LLC is a leading Technology Solutions
Provider in the Northeast US, focused on Managed Services,
Technology Solutions, IT Portfolio Management, and Consulting
Services.
TORONTO, Nov. 18, 2019 /CNW/ - Converge Technology
Solutions Corp. ("Converge" or "the Company")
(TSXV:CTS) (FSE:0ZB) (OTCQX:CTSDF) announced today that it has
acquired all of the voting and economic membership interests of VSS
Holdings, LLC ("VSS") a Northeast based partner focused on
managed services, technology solutions, IT portfolio management,
and consulting services. VSS brings its customers and highly
skilled teams comprised of experienced technology experts, business
consultants, and industry thought leaders to Converge's fast
growing platform.
VSS generated gross invoiced revenues of approximately
US$80 million including approximately
US$14 million of services revenue,
gross profit of approximately US$19
million and Adjusted EBITDA of approximately US$5.7 million for the trailing 12 months ended
September 30,
2019. Consideration for the purchase consisted of (i)
US$15.5 million in cash; (ii)
promissory notes in the total amount of US$1.5 million in favor of the
sellers; (iii) up to an aggregate of US$10 million in earn-out payments for the three
years following closing of the acquisition based on the achievement
of certain milestones; plus (iv) the issuance of a right to the
sellers to exchange the remaining 10% membership interests
constituted solely of Class B membership units in VSS held by the
sellers (the "Retained Interests") which have no right to
any economic or voting participation in VSS, for an aggregate of
approximately 2.93 million common shares of Converge (the
"Exchange Right"), subject to certain conditions. The cash
portion of the purchase price was financed by Converge's credit
facilities. The acquisition is expected to be immediately accretive
to Converge, resulting in increased earnings and adjusted
EBITDA.
No sale of shares acquired under the Exchange Right will be
permitted until at least six months from the acquisition of VSS, an
additional one-quarter of the shares acquired under the Exchange
Right will become eligible for sale on each six-month anniversary
of the completion of the transaction thereafter, such that all
Retained Interests under the Exchange Right of approximately 2.93
million Converge common shares will be available for sale following
the two-year anniversary of the acquisition. Once all of the
Retained Interests have been exchanged pursuant to the Exchange
Right, Converge will hold all of the membership interests in VSS.
The Exchange Right will allow the sellers to receive the
equity component of the consideration for the acquisition of VSS on
a tax-deferred basis, while giving Converge full control of, and
economic interest in, VSS immediately.
VSS CEO, Robert L. Jernoske, Jr.,
will continue in his role along with the existing VSS management
team. Working with VSS, Converge will look to introduce its
Software Enabled Hybrid IT solutions including identity-based
cognitive, cybersecurity, resiliency managed services, multi-cloud
solutions, and enterprise Blockchain to existing and new VSS
customers while leveraging VSS specializations ranging from
virtualization, cybersecurity, power systems, managed services, and
end-to-end data center solutions and services to Converge clients
across North America.
Since 1990, VSS has been helping clients transform their
business using people, process, and technology. After nearly three
decades, VSS has successfully developed a culture that is
passionate about technology solutions and services. VSS aims to
deliver its customers sustainable technologies implemented by its
team of experts to drive business results and deliver on promises
to clients and industry partners.
"VSS is now poised to deliver a more widely-based platform of
services to its customers while still offering its top-of-the-line
customer service and white glove treatment to ensure that their
business objectives are met or exceeded," said Robert L. Jernoske, Jr., CEO of VSS. "We are
excited to add Converge's platform of offerings to new and existing
customers."
"We look forward to VSS joining the Converge family of
companies," said Shaun Maine, CEO of
Converge. "VSS's sales strength in the financial services industry
greatly enhances our capabilities in becoming a dominant
software-enabled Hybrid IT provider in the New York and Mid-Atlantic marketplace as it
builds on the platform we have created there with our previous
acquisitions, Essex Technology Group and Lighthouse Computer
Services. VSS also brings a level of expertise around managed
services that will allow us to continue to drive value with our
Converge private cloud offerings to our clients."
VSS marks the eleventh acquisition completed by Converge since
October 2017. Converge's family of
companies also includes Corus Group, LLC; Northern Micro, Inc.;
10084182 Canada Inc. operating as Becker-Carroll; Key Information
Systems, Inc.; BlueChip Tek, Inc.; Lighthouse Computer Systems,
Inc.; Software Information Systems LLC.; Nordisk Systems, Inc.;
Essex Technology Group, Inc.; and Datatrend Technologies, Inc.
About Converge
Converge Technology Solutions Corp.
combines innovation accelerators and foundational infrastructure
solutions to deliver best-of-breed solutions and services to
customers. The Company is building a platform of regionally-focused
Hybrid IT solutions providers to enhance their ability to provide
multi-cloud solutions, blockchain, resiliency, and managed
services, enabling Converge to address the business and IT issues
that public and private-sector organizations face today. For more
information, visit http://www.convergetp.com.
About VSS, LLC
As a technology solutions provider, VSS
LLC makes it their mission to understand their customers' current
needs, as well as future goals. Through that understanding, their
distinguished engineering team is able to architect visionary
infrastructure which solves both the immediate needs, and future
business initiatives of their customers. For more information,
visit http://thinkvss.com.
Notice to Reader: Use of Non-IFRS Financial Measures
and Forward-Looking Statements
- Non-IFRS Financial Measures
In this news release,
certain non-IFRS measures to evaluate performance are used.
The term "Adjusted EBITDA" does not have any standardized meaning
prescribed within IFRS and therefore may not be comparable to
similar measures presented by other companies. Such measures
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with IFRS such as
net income. Adjusted EBITDA is defined as gross profit less
selling, general and administrative expenses, and corresponds to
income before income tax, depreciation and amortization, finance
expenses, change in fair value of contingent consideration,
transaction costs for acquisitions and other non-operating
expenses.
Management believes Adjusted EBITDA is an important indicator as it
excludes certain items that are non-cash expenses, items that
cannot be influenced by management in the short term and items that
do not impact core operating performance, demonstrating VSS'
ability to generate liquidity through operating cash flow to fund
working capital needs, service outstanding debt and fund future
capital expenditures. Adjusted EBITDA is used by some
investors and analysts for the purposes of valuing an issuer.
The intent of Adjusted EBITDA is to provide additional useful
information to investors and analysts and is also used by
management as an internal performance measurement.
- Forward-Looking Information
This news release
contains certain "forward-looking information" and "forward-looking
statements" (collectively, "forward-looking statements")
within the meaning of applicable Canadian securities legislation
regarding Converge and its business. Any statement that involves
discussions with respect to predictions, expectations, beliefs,
plans, projections, objectives, assumptions, future events or
performance (often but not always using phrases such as "expects,"
or "does not expect," "is expected," "anticipates," or "does not
anticipate," "plans," "budget," "scheduled," "forecasts,"
"estimates," "believes," or intends," or variations of such words
and phrases or stating that certain actions, events or results
"may" or "could," "would," "might," or "will" be taken to occur or
be achieved) are not statements of historical fact and may be
forward-looking statements. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable, are subject to known and unknown
risks, uncertainties, and other factors which may cause the actual
results and future events to differ materially from those expressed
or implied by such forward-looking statements. Except as required
by law, Converge assumes no obligation to update the
forward-looking statements of beliefs, opinions, projections, or
other factors, should they change. The reader is cautioned
not to place undue reliance on forward-looking statements.
Neither the TSX Venture Exchange nor its regulation services
provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Converge Technology Solutions Corp.