Billing Services Grp (LON:BILL) Proposed Disposal and Notice of SGM

Proposed disposal of BSG Wireless business and Notice of Special General Meeting

(The definitions of all defined terms in this announcement are set out below in Appendix III of this announcement)

BSG, a leading provider of telecommunications clearing and financial settlement products, Wi-Fi data solutions and verification services, is pleased to announce that following a competitive sale process, it has entered into a conditional agreement for the disposal of all of the assets (with limited exceptions) of the Company’s wholly owned subsidiary, BSG Wireless Limited, to Single Digits Connection, LLC for approximately US$5,250,000 in cash. For more information on Single Digits, please see: www.singledigits.com.

The size of the proposed transaction means that the Disposal is deemed to result in a fundamental change of business under AIM Rule 15 and, consequently, is conditional, amongst other things, on Shareholder approval at a Special General Meeting to be held at 11.00a.m. on 19 February 2020 at the offices of Reed Smith LLP at The Broadgate Tower, 20 Primrose Street, London, EC2A 2RS. A Circular will be distributed to shareholders today (and made available on the Company’s website at www.bsgclearing.com) to provide, among other things: (i) details of the Transaction; and (ii) notice of the Special General Meeting to be convened to consider and, if thought fit, approve the Transaction.

For the avoidance of doubt, assuming Shareholders approve the Transaction at the Special General Meeting, Billing Services Group will continue to be classified as an operating company and not a cash shell pursuant to AIM Rule 15.

It is currently intended that following completion of the Disposal, the Company will make a cash distribution to shareholders in the first quarter of 2020 in a form and an amount to be determined by the Board, which will take into account other factors described in the Circular.

Completion of the Disposal is conditional upon, among other things, approval of the Disposal by the Shareholders. If such approval is not provided by the Shareholders, the Disposal will not be completed.

INFORMATION ON THE WIRELESS BUSINESS

BSG Wireless offers three primary services to wireless network operators:

· Roaming hub service – this is a managed service for enabling interconnection between Wi-Fi networks. It enables a customer of a carrier to use the networks of other operators. The service tracks, verifies, bills and clears inter-carrier charges;

· “Find and Connect” mobile app – provides a map of Wi-Fi network access points in the vicinity of the phone or other devices. The app authenticates the profile of the user and enables the phone/device to connect seamlessly to the Wi-Fi network; and

· Hotspot location data service – allows operators to manage inventory and locations of their active hotspots.

FINANCIAL INFORMATION IN RELATION TO THE DISPOSAL

In the year ended 31 December 2018 Company generated revenues of US$16.1 million, EBITDA of US$0.8 million and a net loss of US$7.8 million, of which the Wireless Business contributed revenues of US$2.9 million, EBITDA of US$0.48 million and a net loss of US$1.35 million.

PRINCIPAL TERMS OF THE DISPOSAL

Under the Disposal Agreement, which was signed on 30 January 2020, BSG Wireless has conditionally agreed to sell all of its assets (with limited exceptions) to Single Digits.

The purchase price for the BSG Wireless assets is approximately US$5,250,000 in cash, subject to post-Completion adjustment. The consideration will be due in cash at Completion with the exception of US$925,000 of the consideration which is to be held in escrow. The escrow amount is being provided to satisfy any liability of BSG Wireless or the Company under the terms of the Disposal Agreement and will be released to BSG Wireless over a 9 to 18 month period following Completion subject to any warranty or indemnity claims made in this period pursuant to the terms of the Disposal Agreement.

The Disposal is conditional, among other things, upon the approval of Shareholders at the SGM. The parties may terminate the Disposal Agreement by mutual consent, in the event of a breach of warranty, or if Completion has not occurred before 28 February 2020.

Further information on the Disposal and the principal terms and conditions of the Disposal Agreement are set out in Part III of the Circular.

USE OF PROCEEDS

The proceeds receivable by the Company from the Disposal are expected to be approximately US$4.3 million (net of the anticipated escrow amount and before the payment of fees and other costs).

It is currently anticipated that, dependent on the Company’s circumstances following Completion, a cash distribution will be made to Shareholders in the first quarter of 2020 in a form and an amount to be determined by the Directors acting in their discretion. Any proposed distribution would need to be approved by the Board and the Shareholders in accordance with the requirements of the Companies Act.

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