On Track Innovations Ltd.
OTI SIGNS STRATEGIC ACQUISITION AND DIVESTITURE AGREEMENTS
Corporate-news announcement sent by DGAP.
The sender is solely responsible for the contents of this announcement.
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OTI SIGNS STRATEGIC ACQUISITION AND DIVESTITURE AGREEMENTS TO ENHANCE
COMPANY’S PROFITABILITY AND POSITION IN THE EMERGING EUROPEAN MARKETS
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Intercard Kartensysteme GmbH Subsidiary Sold for $2.5 Million
ASEC S.A. of Poland Acquired for $1.95 Million in OTI Ordinary Shares
Fort Lee, New Jersey- September 20, 2004 – On Track Innovations Ltd. (OTI)
(NASDAQ: OTIV; Prime Standard (Frankfurt): OT5), a global leader in
contactless microprocessor-based smart card solutions for homeland security,
micropayments, petroleum payments and other applications, announced today
that it has entered into two agreements in furtherance of its previously-
announced strategic focus on the vertical markets of Payment, Petroleum and
Smart ID solutions. Both agreements are subject to certain closing
conditions. These transactions will strengthen OTI’s position in these
markets, enabling the Company to provide end-to-end solutions with local
technical support and maintain its focus on higher margin products in the
growing European emerging markets. The transactions are expected to improve
the Company’s long-term profitability with some decrease in revenues in the
short term by adding a profitable company with higher margins and recurring
revenue businesses and by selling an existing division with high operating
expenses due to a mix of revenues originating from a large number of limited
size projects and products with relatively low margins.
The first agreement contemplates OTI’s purchase of ASEC Spolka Akcyjna
(“ASEC”) from Nextel Spolka Akcyjna (“Nextel S.A.”), headquartered in Krakow,
Poland. ASEC is a software company that provides complimentary solutions to
OTI in the form of software and back office systems for mass transit
ticketing and Payment solutions. The acquisition of ASEC, a profitable
company, which is already working with OTI on various programs in Poland,
will enable OTI to provide the required local support service for programs
in the emerging European markets and will better position OTI to also provide
complete solutions in these markets for its Petroleum and SmartID solutions.
The second agreement provides for the sale of OTI’s wholly-owned German
subsidiary, InterCard Kartensysteme GmbH. This subsidiary is engaged in the
sale and support of closed campus systems, which is considered to be a
highly competitive market with relatively low margins and high operating
expenses. OTI will retain its profitable InterCard Systemelectronic GmbH
subsidiary, which provides OEM and electronics manufacturing services.
In commenting upon the two transactions, Mr. Oded Bashan, President & CEO of
OTI noted that “we have been able to accomplish two significant steps in
furtherance of the restructuring of our marketing strategy which we initiated
earlier this year, and which focuses on OTI providing complete solutions to
the three vertical markets of Payment, Petroleum and SmartID. These
transactions will strengthen our position and our ability to focus on these
vertical growing markets where we sell products that adhere to our higher
margin and recurring revenues business model. The divestiture of our
Intercard Kartensysteme subsidiary will enable us to concentrate our
resources in areas that we believe to be more promising and potentially
more profitable”.
In exchange for all of the outstanding shares of the capital stock of ASEC,
OTI will issue to Nextel S.A. OTI ordinary shares having an aggregate market
value of between $1.6 million and $1.95 million. The exact amount will
depend upon the level of EBITDA achieved by ASEC during 2004 and 2005. OTI
has undertaken to register the shares it will issue to Nextel S.A. under the
U.S. Securities Act of 1933. The proceeds payable to OTI for the outstanding
shares of InterCard Kartensysteme are expected to be approximately $2.5
million.
The Company has scheduled a conference call for Monday, September 20, 2004 at
2:00 PM EDT to answer investors’ questions about the transactions.
To participate, call: 1-800-963-8290 (U.S. toll free), 1-800-931-5196 (Israel
toll free), 0-800-182-1463 (Germany toll free), or 1-973- 409-9260 (standard
international) ID Code: 5194945.
Real Player Webstream Link:
http://www.econfcall.net/support/streamcheck.cgi?id=4250&folder=default
Windows Media Webstream Link: http://www.econfcall.net/support
/streamcheck.cgi?id=4252&folder=default
About OTI
Established in 1990, OTI (NASDAQ: OTIV, Prime Standard: OT5) designs,
develops and markets secure contactless microprocessor-based smart card
technology to address the needs of a wide variety of markets. Applications
developed by OTI include product solutions for petroleum payment systems,
homeland security solutions, electronic passports and IDs, micropayments,
mass transit ticketing, parking, loyalty programs and secure campuses.
OTI has a global network of regional offices to market and support its
products. The company was awarded the prestigious ESCAT Award for smart card
innovation in both 1998 and 2000. Major clients include: MasterCard
International, Atmel, BP, Scheidt & Bachmann, EDS, Repsol, and the Government
of Israel. For more information on OTI, visit http://www.otiglobal.com .
end of message, (c)DGAP 20.09.2004
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WKN: 924895; ISIN: IL0010834682; Index:
Listed: Geregelter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin-
Bremen, Düsseldorf, Hannover, München und Stuttgart
201300 Sep 04
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