Toronto-based DealNet Capital Corp. (CNSX:DLS) (OTC:GAIMF) says it has renegotiated and revised the terms of its proposed acquisition of Atlanta-based Home Services Company (HSC), initially announced in September.
HSC provides Heating Ventilation and Air Conditioning (HVAC) after-market protection plans to homeowners in the greater Atlanta area.
Under the new terms, the consideration at closing will be $50,000 in common shares, with deferred payments of $100,000 in stock due when HSC achieves certain customer targets.
There will also be an earn-out cash payment of $7.50 per qualified customer, with the earn-out capped at a maximum of $140,000 over a period of two years.
Merchant banking company DealNet Capital, which was previously a company called GameCorp, continues to restructure its business from the gaming industry to heating ventilation and air conditioning (HVAC) financing and services, water heater rentals and the business process outsourcing (BPO) business.
The business model of the company has seen the establishment of a BPO segment for "sustainable and predictable revenue generation", which has been leveraged to enter the North American HVAC financing and servicing market, as well as the water heater rental business.
The BPO segment is intended to provide a concrete base for the company to establish its One Dealer business in the North American HVAC and water heater financing industry, by providing customer care services and automation technology.
Through One Dealer, DealNet plans to bring together more than 80,000 small and intermediate-sized dealers in the North American HVAC and water heater rental industry under one umbrella.
"The acquisition of the HSC will strengthen the company’s position in the lucrative HVAC financing and services vertical as we look to expand our platform whilst leveraging the infrastructure provided by our thriving BPO division," said president of DealNet, Bob Cariglia.
"Management felt it was in the best interests of the company and our shareholders to revise the terms of the transaction ensuring both parties are suitably aligned to execute on the business plan.”
At closing, the company will also issue 1.0 million common share purchase warrants, with each warrant gold for the purchase of another share at a price of 25 cents for a period of three years. The warrants will vest based on HSC achieving certain customer targets.
The deal is expected to close around December 7, or later if there is any required regulatory approval.
Just last week, Toronto-based DealNet said that its BPO subsidiary, OC Communications Group, secured an early renewal and contract extension with a utility provider in Texas. With the original contract set to expire in February 2013, the US utility provider has contracted the BPO segment to deliver services over the next two years, running through November 2014.
DealNet said its BPO division has been servicing the needs of utility customers in the United States for more than six years, and has established "significant credibility in the highly competitive industry".
OC Communications will continue to manage all aspects of sales and customer service for the Texas-based utility service provider, including account management, payments, escalations, acquisitions and retention.
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