Goldmoney Announces Acquisition of Schiff Gold Inc. and formation of Joint Venture with Renowned Gold Investor Peter SchiffJul 8, 2016
Goldmoney Announces Acquisition of Schiff Gold Inc. and formation of Joint Venture with Renowned Gold Investor Peter Schiff
-Strategic Partnership Formed to Enhance Customer Acquisition and Marketing Presence of Goldmoney Innovation through Mr. Schiff’s Substantial Global Following and Millions of Media Impressions
-Goldmoney Technology to Provide Operational Efficiencies, Cost Savings, and Marketing Scale to Schiff Gold, Expected to Enhance Margin Growth on Strong and Growing Revenue Base
-Generates Significant Value for Shareholders; Expected to be Highly Accretive to Revenue and Gross Profit Growth Per Share Post-Closing
Toronto, Ontario (July 8, 2016) – Goldmoney Inc. (TSX: XAU) (“Goldmoney”), a financial technology company, which operates a global, full-reserve and gold-based financial network, is pleased to announce that the Company has entered into an Acquisition Agreement to acquire Schiff Gold Inc. (“SGI”) and form a marketing and service agreement with Peter Schiff. SGI is a private, U.S.-based dealer in precious metals (formerly launched in 2010 as Euro Pacific Precious Metals), one of the largest and fastest growing retail gold dealers, and services a large client base with buy and sell orders for precious metals, storage and vaulting arrangement, and gold & silver IRA arrangement services. Upon closing of the transaction, the Company will also enter into a Marketing and Service agreement with Peter Schiff, where Mr. Schiff will integrate and endorse Goldmoney services for clients and subscribers across various companies and media platforms.
The acquisition of Schiff Gold is expected to add significant revenue and increase the Company’s gross profit and free cash flow generation. In 2015 alone, Schiff Gold sold over $125 million1 in precious metals, generated $2.8 million1 of gross profit and paid cash distributions of $0.975 million1 to its shareholders. Goldmoney believes there to be cost savings derived from the business combination that should result in additional operative leverage and margin expansion at the Schiff Gold business. As an example, the present Schiff Gold business generates its sales through wire transfer deposits and invests very little in marketing. Additional financial information relating to the existing gold business will be released upon closing.
“Peter is the LeBron James of the gold market with hundreds of thousands of trusted followers and an unrivaled track record in predicting some of the most important macroeconomic events of the last 20 years. Following an initially heated public debate in March, Peter and I struck a private friendship. Through in-person meetings and many thoughtful conversations it became clear to both Peter and I that we shared the same vision and goals, that Peter was motivated by the same mission that guided us, and that his business and brand could be better leveraged using the Goldmoney technology. I am extremely excited to be welcoming Peter to the Goldmoney tent and I believe his millions of followers will be much better monetized through a platform that can economically service a global user base with no minimums, superior technology, and multiple deposit and redemption options. We will unveil the full combination strategy at closing,” said Roy Sebag.
“I’m thrilled to be joining the Goldmoney team,” said Peter Schiff. “For my entire career I have sold gold to high net worth individuals looking to incorporate precious metals into otherwise diversified investment portfolios. While the vast majority of investors have yet to make such an important allocation shift, its average individuals who actually have the most to gain by utilizing the protection of gold for day to day savings of income. The Goldmoney platform provides this utility, simple and transparent access to the best possible defense against theft by inflation. Technology is providing more choice and easier access to everything, and the hope is that market forces will compel central banks to provide a more competitive product and put the brakes on run-away-inflationism and the asset-bubble economics that is undermining living stands world-wide.”
“We are excited to welcome Peter Schiff as an important stakeholder and advocate of the Goldmoney mission to democratize access to gold,” said Josh Crumb, Chief Strategy Officer. “Roy and I are grateful for the growing support and confidence among the gold community, and look forward to Peter’s thought leadership and collaboration with Goldmoney stakeholders James Turk, Eric Sprott, Albert Friedberg, John Butler, Alasdair Macleod, Stefan Wieler, and our many notable shareholders.”
The transaction has been structured as a joint venture between Peter Schiff and Goldmoney, with a consulting agreement between Goldmoney and Euro Pacific Asset Management LLC. The joint venture will be issued 1,063,000 common shares of Goldmoney with a deemed value of $5,315,000 (equivalent to CAD $5.00 per share), as well as 1,400,000 common share purchase warrants (“Warrants”) as follows: (i) 700,000 Warrants exercisable at CAD $5.00 per share for a period of 10 years; (ii) 350,000 warrants exercisable at CAD $5.25 per share for a period of ten years; and (iii) 350,000 warrants exercisable at CAD $5.80 per share for a period of ten years. Peter Schiff will have the right to be distributed the Goldmoney securities by the joint venture.
The first 700,000 common shares of the 1,063,000 shares are subject to one-third automatic releases on each of the first, second and third anniversaries of the closing. All of the above-noted 1,400,000 Warrants and the remaining 363,000 common shares are subject to performance vesting over a three-year period in accordance with performance criteria under a consulting agreement to be entered into between Goldmoney and Euro Pacific Asset Management LLC. Pursuant to the consulting agreement, Euro Pacific Asset Management LLC will provide strategic development, product development, branding and marketing services to Goldmoney. Euro Pacific Asset Management LLC shall be paid fees equal to 50% of the distributable income from Schiff Gold Inc. with a minimum term of twenty years. For a period of five years after the twentieth anniversary of closing, Goldmoney shall have the right, but not the obligation, to terminate the consulting agreement in consideration for a payment equal to the average of distributable income over the prior five years.
The transaction is subject to customary commercial closing conditions including regulatory approval, and is expected to close within 45 days.
Goldmoney and Schiff Gold will host a conference call at a later date to discuss the transaction. Additionally, Josh Crumb and Roy Sebag will be guests on Peter Schiff’s podcast next week to discuss in depth plans for the business and provide some additional information on the shared vision for the future.
1. Based on unaudited financial information, using a $1.2995 USD/CAD FX conversion fee, and is subject to audit.
Goldmoney Inc. is a global, full-reserve and gold-based financial services group. Goldmoney provides financial services as a trusted, limited third-party, combining the unique attributes of gold with technology-driven innovation. Through Goldmoney® Personal and Goldmoney® Business, the company operates the world’s largest self-directed gold savings and payments network, making allocated physical gold accessible as a currency to any person or business with internet access. Through GoldMoney® Wealth the company offers bespoke precious metals custody and wealth services, trading and execution, card services, tax free retirement accounts and independent research to high net worth individual investors and institutions. GoldMoney Inc. has over 1,000,000 user signups from over 150 countries and $1.8 billion in client assets. Goldmoney is regulated as a Dealer in Precious Metals by FINTRAC in Canada, and in addition, Goldmoney Wealth is regulated as a Money Services Business by the Jersey Financial Services Commission (JFSC). The JFSC is the main supervisory body that oversees and regulates Jersey’s large financial services industry. For more information on Goldmoney® Personal and Goldmoney® Business, visit bitgold.com. For more information on Goldmoney Wealth, visit ir.goldmoney.com.
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Chief Strategy Officer
This news release contains certain “forward-looking information” within the meaning of applicable Canadian securities laws. Forward looking information includes, but is not limited to, statements, projections and estimates with respect to the rebranding of the Goldmoney Inc. (the “Company”) businesses and website. Any statements that involve 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 information and are intended to identify forward-looking information. This forward-looking information is based on reasonable assumptions and estimates of management of the Company at the time it was made, and involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Such factors include, among others: the need for regulatory approvals; the Company’s limited operating history; future capital needs and uncertainty of additional financing; the competitive nature of the industry; unproven markets for the Company’s product offering; volatility of gold prices & public interest in gold investment; lack of regulation and customer protection; the need for the Company to manage its planned growth and expansion; the effects of product development and need for continued technology change; protection of proprietary rights; the effect of government regulation and compliance on the Company and the industry; network security risks; the ability of the Company to maintain properly working systems; foreign currency and gold trading risks; use and storage of personal information and compliance with privacy laws; use of the Company’s services for improper or illegal purposes; global economic and financial market conditions; uninsurable risks; and those risks set out in the Company’s public documents filed on www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company undertakes no obligation to revise or update any forward-looking information other than as required by law.