Wellesley, Mass.-based Trillium Capital said Thursday that it had submitted a proposal to buy Stream Global Services Inc. The firm offered $4.65 per share in cash, plus assumption or replacement of its $200 million high yield bonds due 2014, the firm said in a written release. Stream Global provides business process outsourcing services. Kaufman Bros. is Trillium’s financial advisor on the deal.
Trillium Capital LLC, a Delaware limited liability corporation, located in Wellesley, MA (“Trillium”) has submitted a non-binding proposal to the Board of Directors of Stream Global Services, Inc. to acquire 100% of the duly issued and outstanding common shares of Stream Global Services, Inc. and all of its subsidiaries (“Stream or the “Company”), (NYSE/AMEX:SGS), for a price per common share for $4.65 in cash plus assumption or replacement of its $200 million high yield bonds due 2014. Trillium’s proposal is based upon publicly available information about the Company, information about its direct competitors and the contact center industry that is available to all stockholders of Stream.
Stream is a premium business process outsource (BPO) service provider specializing in customer relationship management and business process outsourcing services for many of the leading Fortune 1000 companies.
Trillium has outlined the terms and conditions of its non-binding proposal in a letter to the Board of Directors of Stream, presented to its Chairman and Chief Executive Officer at Stream’s Annual General Meeting of Stockholders on June 1, 2011. Trillium’s proposal includes, among other things:
A purchase price of $4.65 per common share in cash for 100% of the duly issued and outstanding shares of Stream (assuming that total common shares outstanding of approximately 80.4 million shares).
Extension through a private exchange offer of the exercisability period of Stream’s publicly traded warrants (SGSWS) for an additional two years that would otherwise expire after October 17, 2011 (assuming total public warrants outstanding of approximately 7.3 million public warrants) to October 17, 2013 and become warrants in a privately held successor company following the closing.
Allowing certain of the existing inside investors of Stream – Ares Management, Providence Equity Partners and Ayala Corp or their affiliates – (as well as other investors who may be interested) to convert their current ownership of Stream, under certain conditions, to the privately held successor company. Such converted ownership positions of the existing inside investor shareholders of Stream shall be limited to a maximum of 40% of the fully diluted share ownership of the successor company after closing of the proposed transaction.
Inside investors, Ares Management, Providence Equity Partners and Ayala Corporation or their affiliates, would be required to terminate their pre-emptive rights agreement with the Company that allows for them to purchase approximately 18 million common shares at a $6.00 strike price per share that would otherwise expire on October 17, 2011 and terminate their shareholder agreement that allows them various governance rights and rights to appoint executive management and set their compensation and appoint almost all of the Board of Directors, among other things.
Execution of a standard definitive acquisition agreement that would include typical representations and warranties, standard escrow arrangements, a market based break up fee, among other things, for a transaction of this nature. Trillium’s proposal also requires that the directors and officers of Stream and their respective investment firms or affiliates recommend the proposed transaction to stockholders and agree to vote all of their shares of the Company in favor of the proposed transaction by signing voting agreements prior to Trillium and its financing sources starting substantial due diligence or documentation of the transaction. These irrevocable voting agreements would become effective upon entering into a definitive acquisition agreement.
The closing conditions are more fully described in Trillium’s non-binding offer letter dated June 1, 2011 to Stream’s Board of Directors and include, among other things, (i) completion of standard due diligence by Trillium and its financial sponsors, advisors and lenders; (ii) completion of related debt and equity financing; (iii) approval by the Company’s inside investors, Ares Management LLP, Providence Equity LLP and Ayala Corp or their affiliates, who own approximately 87% of the outstanding common shares of Stream and control Stream’s Board of Directors; (iii) approval of holders of at least 90% of Stream stock; and (iv) obtaining necessary regulatory and other approvals.
Scott Murray, the President and the controlling shareholder of Trillium has extensive experience in the contact center industry and related technology, and a deep network of industry relationships, management talent and financial investors. He was the founder of Stream’s predecessor company, Global BPO Services, Corp that became a publicly traded company in October 2007 and raised $250 million. Up until August 2010, Mr. Murray was the Chairman and Chief Executive Officer of Stream. He is considered a leading expert and a visionary in the contact center industry. Murray is also considered a proven entrepreneur and successful investor partner with some of the leading private equity firms in the world and has a network of financing sources. Prior to Stream he was the CEO of 3Com Corporation; the Chairman of H3C, a China based networking technology joint venture with Huawei Technology; the CEO of Modus Media International; the President of Stream International and the EVP & CFO of The Learning Company. Each of these companies led by Mr. Murray has provided superior financial returns to their investors.
Trillium has direct control of 3.728 million common shares of Stream or approximately 4.6% of Stream’s issued and outstanding common shares and also owns 1000 of its public warrants. Trillium will vote its shares in favor of the proposed transaction. Trillium believes that it has arranged the necessary equity and debt financing in order to complete the transaction, subject to standard due diligence and other normal transaction related matters and approvals.
Scott Murray, President of Trillium Capital LLC, said, “We believe that our proposed purchase of Stream Global Services provides substantial value for its stockholders and its public warrant holders greater then any other option put forward by the Company. Our proposal represents over a 53% premium of the most recently quoted market price as of May 31, 2011. In fact, our proposal is over 80% higher then the Company’s lowest closing price of $2.54 per common share as quoted on the NYSE/AMEX over the past twelve months. We believe that our long- standing history with the Company, its clients, its employees and our deep experience in the contact center industry make us the ideal acquirer of the Company to maintain the excellent service that Stream’s clients have come to expect. Our expertise in the contact center industry and in experience in successfully completing transactions of this nature should allow us to quickly complete due diligence and other necessary work in a very efficient and timely manner. We believe that our non-binding proposal will provide great career opportunities and value creation for Stream’s employees as we expect to issue employee stock options with a strike price at the transaction price”. Mr. Murray went on to say, “We are hopeful that the Board of Directors of Stream and its inside investors will quickly begin negotiations with us, form a special committee of its independent directors to consider our proposal, enter into a standard non-disclosure agreement with us and provide the necessary due diligence information and access to the Company in order for us to reach a definitive agreement as quickly as possible in order to maximize the value for Stream stockholders.”
Trillium is represented by its legal advisor Bowditch & Dewey LLP of Boston, MA. Kaufman Bros., L.P. of New York City, NY, is Trillium’s financial advisor on the proposed transaction.
About Trillium Capital LLC:
Trillium Capital LLC is an investment firm located in Wellesley, MA that makes investments in companies and provides advisory services to private equity firms. Its primary asset is its ownership of 3.728 million common shares of Stream Global Services, Inc.