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IXI Mobile Secures Funding to Support Sales Growth
Funds to be used largely to support working capital needs
Jun 21, 2006 1080 words, 0 images
REDWOOD CITY, Calif., June 21 -- IXI Mobile, Inc., developer of the Ogo(TM) family of mobile messaging solutions for the mass market, today announced that it secured financing from Southpoint Master Fund LP, an affiliate of Southpoint Capital Advisors LP, a US-based investment fund, to meet its working capital needs and to refinance existing debt. The gross proceeds of the financing, prior to deducting the transaction expenses, were $20 million. Roughly $1 million of the net proceeds will be used to refinance debt, with the balance to be used to fund IXI Mobile's working capital needs.
On February 28 2006, IXI Mobile entered into a definitive agreement pursuant to which IXI Mobile would merge with a wholly owned subsidiary of Israel Technology Acquisition Corporation (ITAC) (OTCBB = ISLT.OB) . The merger is subject to certain conditions, including approval by ITAC stockholders. At closing, IXI would have access to approximately $34 million currently held in a trust account. Within 60 business days of the closing of the merger, the loan arising from the financing will be repaid or, at the election of the investor, converted in whole or in part into ITAC shares at a conversion price of $6.50 per share. The loan bears interest at 10% per annum.
IXI sought this interim financing to support repeat orders from existing customers and orders from new customers that need to be met before the closing of the merger with ITAC. As of December 31, 2005, IXI had a backlog of approximately $1 million, and as of March 31, 2006 and May 31, 2006, the company had backlogs of approximately $8 million and $14 million, respectively.
Separately, existing venture investors in IXI have guaranteed an $8 million loan previously extended to IXI from an Israeli bank with the right to acquire this loan from the bank. If the investors acquire this loan, it will be repaid within 60 business days of closing of the merger or converted, in whole or in part, into ITAC shares at a price of $6.50 per share.
As part of these transactions, if the merger with ITAC closes, the lender and existing investors will be issued an aggregate of 840,000 ITAC shares, and, if 50% or more of the total loan amount is converted, will receive warrants to purchase ITAC shares. The warrants will have an exercise price of $5.00 per share and will be issued at the rate of 0.0357 warrants for every $1 converted. The warrants will be identical to ITAC's currently outstanding warrants. Per the distribution formula, if the loans are fully converted, warrants to purchase 1,000,000 ITAC shares will be issued.
IXI sells Ogo in several countries worldwide. The working capital raised will be used to finance the manufacturing and delivery of Ogo products as well as to pursue future global sales opportunities. Amit Haller, Co-Founder, President and CEO of IXI Mobile said, "As a result of growing demand for our Ogo solution, and in order to support in-hand customer orders and Ogo's global expansion, we needed additional funding." He continued, "With these added resources we will be able to finance our current sales commitments and actively pursue Ogo sales prospects worldwide."
IXI's customer base includes leading mobile operators and Internet service providers. IXI's Ogo was launched in the United States by AT&T Wireless (now Cingular Wireless), in Switzerland by Swisscom Mobile, the leading mobile operator in Switzerland, in Turkey by e-kolay.net, a leading ISP in Turkey and part of Turkey's leading media-entertainment conglomerate, and in Germany by 1&1, the leading Internet provider in Europe, in cooperation with Vodafone Germany. IXI recently brought Ogo to Latin America, with the first launch via new customer, ANCEL, the leading operator in Uruguay.
About IXI Mobile