Acquisition of NetBenefit (UK) Limited
Analyst Conference Call
June 6, 2012
Forward Looking Statements
Certain statements made in this presentation including, but not limited to, statements relating to the
acquisition by PEER 1 Network Enterprises, Inc. (“PEER 1”) of all of the issued and outstanding
shares in the capital of NetBenefit (UK) Limited, certain strategic benefits and operational, competitive
and cost efficiencies expected to result from the acquisition, PEER 1’s expected level of pro forma net
leverage ratio and other statements in this presentation relating to matters that are not historical fact
are forward-looking statements based on current expectations, forecasts and assumptions that involve
risks and uncertainties that could cause actual outcomes and results to differ materially. Factors that
could cause or contribute to such differences include, but are not limited to, the transaction might not
close, the potential impact on the business of NetBenefit due to the uncertainty about the acquisition,
the retention of key employees of NetBenefit, the ability of PEER 1 to successfully integrate NetBenefit
and to achieve the anticipated synergies, general economic conditions, changes in technology,
managing rapid growth, global sales risks, limited intellectual property protection and other risks and
uncertainties described in PEER 1’s public filings with securities regulatory authorities. Any forward
looking statements in this presentation are based on the information about NetBenefit currently
available to PEER 1, which is subject to change, and PEER 1 will not necessarily update the
information, except as required by law
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Transaction Overview
•
Entered into a definitive agreement to acquire all of the outstanding shares
of NetBenefit (UK) Limited, a leading UK-based managed hosting provider
•
Total acquisition price of £25.0 million (USD $38.5 million)
•
All cash transaction
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Immediately and significantly accretive to revenue, EBITDA and free cash flow
Fully funded through cash on hand and available resources under existing credit
facilities, including a US$25 million accordion facility underwritten by National
Bank Financial in support of the acquisition
Closing expected on or around June 30, 2012
Acquiring a leading UK-based managed hosting provider
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NetBenefit Overview
•
Founded in 1995; division of London
based Group NBT
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Group NBT is a leading provider of
domain names and brand protection
services
•
Managed hosting provider, with cloud
based services
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Primarily target SME’s in the UK
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•
FY 2012 Forecast Results
(June 30th)
US$12.5MM
US$3.8MM
10% of revenue from small
sales/support presence in France
Approximately 700 customers and 50
employees
Revenue
•
EBITDA
Two primary, leased datacenters in
greater London
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Acquisition Rationale
Strategic Value
Material Cost
Synergies
•
Vaults PEER 1 into a clear leadership position in the UK
managed hosting market
•
Opportunity to up sell NetBenefit customer base
•
Sales and support presence in France provides an
opportunity to test expansion in Continental Europe
•
Enhanced operating scale in the UK
•
3 year contract to provide mission critical hosting services
back to Group NBT (estimated at £1.5 million per annum)
•
Financial resources to further leverage NetBenefit’s core
competencies
•
Datacenter lease cost savings
•
Office rent savings
•
Reduced support costs
•
Headcount rationalization
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Key Transaction Details
Acquisition Price
•
£25.0 million (US$38.5 million)
•
Fully funded from cash on hand and available credit facilities
•
Cost synergies estimated at US$2.0 million, to be fully
realized within 18 months following closing
•
Enhanced free cash flow generation allows for rapid
deleveraging and strong shareholder returns
Estimated
Financial Impact
Transaction
Value
 Pro forma funded debt/EBITDA at closing of 2.68x
•
One-time transaction, transition and integration costs of
US$2.6 million to be incurred principally in the current fiscal
quarter and Q1 FY13
•
10.1x FY12 EBITDA
•
6.6x FY12 EBITDA, when adjusted for estimated cost
synergies
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New Credit Facilities
•
National Bank Financial appointed sole lead arranger and book runner to
syndicate US$150 million in new credit facilities
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US$100 million committed term loan
US$50 million committed revolver
US$25 million uncommitted accordion
•
Use of proceeds - repayment of existing credit facilities, capital
expenditures, permitted acquisitions, and general corporate purposes
•
Subject to the preparation, execution and delivery of mutually acceptable
loan documentation and other customary conditions
•
Closing expected June 30th
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Summary
•
Highly compelling acquisition
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Vaults PEER 1 into leadership position in the UK
Immediately and significantly accretive
Fully funded, all cash transaction
Strong credit profile maintained
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New credit facilities preserve access to non-dilutive capital on attractive terms
Balance sheet strength and flexibility preserved
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Q&A
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