Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - Startek, Inc. | srtex99220183158ka.htm |
| EX-99.4 - EXHIBIT 99.4 - Startek, Inc. | srt_ex994x2018315-8ka.htm |
| EX-99.3 - EXHIBIT 99.3 - Startek, Inc. | srtex99320183158ka.htm |
| EX-99.1 - EXHIBIT 99.1 - Startek, Inc. | srtex99120183158ka.htm |
| 8-K/A - 8-K/A - Startek, Inc. | a8-kaxemployeeandothercomm.htm |
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STARTEK + AEGIS
Transaction Overview
March 15, 2018
2
• Forward-Looking Statements
• The matters regarding the future discussed in this news release include forward-looking statements as defined in the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are intended to be identified in this document by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “objective,” “outlook,” “plan,” “project,” “possible,” “potential,” “should” and similar expressions. As described below, such statements are subject to a
number of risks and uncertainties that could cause STARTEK's actual results to differ materially from those expressed or implied by any such forward-looking
statements. These factors include, but are not limited to, risks relating to our reliance on a limited number of significant customers, lack of minimum purchase
requirements in our contracts, the concentration of our business in the communications industry, lack of wide geographic diversity, maximization of capacity
utilization, foreign currency exchange risk, risks inherent in the operation of business outside of the United States, ability to hire and retain qualified
employees, increases in labor costs, management turnover and retention of key personnel, trends affecting companies’ decisions to outsource non-core
services, reliance on technology and computer systems, including investment in and development of new and enhanced technology, increases in the cost of
telephone and data services, unauthorized disclosure of confidential client or client customer information or personally identifiable information, compliance
with regulations governing protected health information, our ability to acquire and integrate complementary businesses, compliance with our debt covenants,
ability of our largest stockholder to affect decisions and stock price volatility. Risks related to the Aegis transaction include failure to obtain the required vote of
STARTEK’s stockholders, the timing to consummate the proposed transaction, the risk that a condition to closing of the proposed transaction may not be
satisfied or that the closing of the proposed transaction might otherwise not occur, the risk that a regulatory approval that may be required for the proposed
transaction is not obtained or is obtained subject to conditions that are not anticipated, the diversion of management time on transaction-related issues,
difficulties with the successful integration and realization of the anticipated benefits or synergies from the proposed transaction, and the risk that the
transaction and its announcement could have an adverse effect on STARTEK’s ability to retain customers and retain and hire key personnel. Readers are
encouraged to review Item 1A. - Risk Factors and all other disclosures appearing in the Company's Form 10-K for the year ended December 31, 2017 filed
with the SEC and in certain filings that we make with the SEC for further information on risks and uncertainties that could affect STARTEK's business,
financial condition and results of operation. STARTEK assumes no obligation to update or revise and forward looking statements as a result of new
information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as the date
hereof.
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3
• Additional Information about the Transactions and Where to Find It
• This communication is being made in respect of the transactions between STARTEK, CSP and Aegis and the related issuance of the common stock
described herein. STARTEK intends to file the proxy statement with the Securities and Exchange Commission (SEC) for the stockholder meeting that will
include a proposal relating to the issuance of common stock to CSP and an amendment of STARTEK’s certificate of incorporation related to the transaction.
This communication does not constitute a solicitation of any vote or proxy from any of STARTEK’s stockholders. Investors are urged to read the proxy
statement carefully and in its entirety when it becomes available and any other relevant documents or materials filed or to be filed with the SEC or
incorporated by reference in the proxy statement, because they will contain important information about the transactions between STARTEK, CSP and Aegis,
the issuance of common stock and the proposals to be submitted to the STARTEK stockholders. The proxy statement will be mailed to the Company’s
stockholders. In addition, the proxy statement and other documents will be available free of charge at the SEC’s internet website, www.sec.gov. When
available, the proxy statement and other pertinent documents may also be obtained free of charge at the Investor Relations section of STARTEK’s website,
www.startek.com, or by directing a written request to StarTek Investor Relations, 8200 E. Maplewood Ave., Suite 100, Greenwood Village, Colorado 80111 or
at tel: (303) 262-4500 or email: investor@startek.com.
• Participants in the Solicitation
• STARTEK and its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of
proxies from the Company’s stockholders in connection with the proposed transaction. Information about the Company’s directors and executive officers is
included in STARTEK’s Annual Report on Form 10-K for the year ended December 31, 2017, to be filed with the SEC on or about March 16, 2018, its proxy
statement for its 2017 annual meeting of shareholders, which was filed with the SEC on March 29, 2017, and in other documents filed with the SEC by
STARTEK and its officers and directors.
• This presentation is copyright 2018 STARTEK, Inc. All rights reserved.
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Transaction Overview
4
At closing, STARTEK will issue 20.6 million shares to an affiliate of Capital Square Partners (CSP) for a strategic transaction
involving CSP portfolio company ESM Holdings Limited (Aegis) to acquire all outstanding common stock of Aegis1
Concurrently, CSP or an affiliate will purchase 833,333 shares of STARTEK common stock at a price of $12.00 per share,
representing a $10 million investment in STARTEK1
The transaction is expected to close no later than the third quarter of 2018, subject to approval by STARTEK shareholders
and other customary closing conditions
- No financing conditions
Together, STARTEK and Aegis represent the creation of a truly global enterprise with over 50,000 employees and operations
in 13 countries, serving as a pre-eminent BPO services provider worldwide
- Significant revenue diversification; top 3 clients would represent < 30% of revenue based on 2017 revenue (vs. 53% for
STARTEK in 2017)
- Combined 2017 revenue of ~$700 million and combined 2017 Adjusted EBITDA of ~$50 million2
- Synergies expected to drive incremental $30 million in EBITDA by 2020 through enhanced revenue growth and cost savings
Post-transaction, STARTEK shareholders will own approximately 45% of the combined business, while CSP will own
approximately 55%
1) The number of shares issued and amount of cash investment are subject to potential adjustment based on the relative net debt of the parties. Net debt is a non-GAAP financial measure representing indebtedness as reduced by cash.
2) Based on STARTEK financials through 12/31/2017 as reported under U.S. GAAP and Aegis financials based on unaudited LTM results through 12/31/2017 as reported under IndAS. Note, financials are preliminary and may be
updated in the anticipated proxy filing related to this transaction. EBITDA and adjusted EBITDA are non-GAAP financial measures. Refer to Appendix B for a reconciliation to STARTEK reported GAAP results. 3
Overview of Aegis
5 4
Telecom & Media
Travel, Logistics & Hospitality
Banking, Financial Services and Insurance
Retail, CPG, E-commerce
Energy & Utilities
Industrial / Technology
A Global Service Leader
Global provider of Business Process Outsourcing
(BPO) services including Contact Centre, Finance &
Accounts, Payroll, HR, Spend Management and IT
Client-centric, global delivery model – onshore,
offshore and near shore presence
Proven track record of acquisition and significant
value creation
Diversified marquee client base with strong
relationships with leading blue-chip clients; top 3
clients represent only ~33% of revenue1
~40,000 employees globally
~32,000 seats across 8 countries
44 locations worldwide
40+ languages
Broad Sector Diversification
1) Based on fiscal year-to-date 12/31/2017, Aegis fiscal year ends March 31.
Meaningful revenue synergies expected from service- and geography-based
cross-selling, and targeting new clients with global service needs
Gain scale and deepen presence in overlapping verticals
Utilization of existing capacity to support margin-accretive growth
Overnight operation of daytime facilities to serve clients across time zones
Reduced duplicative corporate overhead costs
Seasoned executive leadership and joint management team
Significant public market experience
Increased client diversification
Flexibility to respond to client needs across multiple geographies
Increased purchasing power
Shared IT and operational best practices
Key Investment Highlights of the Combined Company
6 5
Growth
Opportunities
Efficiency
Opportunities
Large Scale
and
Global Reach
Experienced
Leadership
The STARTEK and Aegis combination results in a powerful global platform
~45% ~55%
Post-Transaction
Equity Split
STARTEK + Aegis Financial Snapshot
7
1) STARTEK financials as reported through 12/31/2017 per U.S. GAAP. Aegis financials based on unaudited LTM results through 12/31/2017 per IndAS. Combined financials before expected synergies. Note, financials are preliminary and
may be updated in the anticipated proxy filing related to this transaction. EBITDA and adjusted EBITDA are non-GAAP financial measures. Refer to Appendix B for a reconciliation to STARTEK reported GAAP results.
2) Relative enterprise value based on STARTEK closing share price as of March 14, 2018, each party’s post-closing share counts, and targeted net debt amounts agreed pursuant to the transaction agreement. Net debt is a non-GAAP
financial measure representing indebtedness as reduced by cash.
3) STARTEK fully diluted shares using Treasury Stock Method. Based on share price as of March 14, 2018.
4) Reflects combination of targeted closing net debt amounts, less $10mm cash contribution from Additional Share Issuance, plus estimated $13mm in transaction expenses.
$293
$388
~$700
$13
$38
~$50
~$80
STARTEK Aegis Combined With
Synergies
2017 Revenue
2017 Adjusted EBITDA
Financial Snapshot1
($ in millions)
Combined
i ed
Relative Breakdown
STARTEK Aegis
~36%
~64%
Adjusted EBITDA
Contribution
~25%
~75%
Relative Enterprise
Value2
Existing
STARTEK
Share-
holders
Existing
Aegis
Share-
holders
STARTEK3 Aegis Combined
STARTEK Shares 17.4 21.4 38.8
Targeted Closing Net Debt $28 $150 $1811,4
Preliminary Pro Forma Capitalization
(in millions)
6
Focus on de-levering through free cash flow generation and
expected synergies
Post
Exp ct d
Synergies
Global Platform with Geographic Revenue Diversification
8
STARTEK Standalone Combined Geographic Reach
Combined platform provides operations in
13 countries and the scale to serve the
largest clients globally
Aegis Standalone
7
Complementary Service Offerings and Capabilities
9
Unique Capabilities Combined
Services
Unique Capabilities
Ideal Dialogue
Data analytics
Omni-channel
expertise
Healthcare solutions
Scientific research
On-shore, near-
shore and off-shore
delivery models
Enhanced analytics
capabilities
CX consulting and
professional
services
LISAn – social media
solutions for enterprises
Travel / financial
services vertical
solutions
Energy / utilities vertical
solutions
Multilingual focus
Each business brings unique services in addition to core competencies in
contact center solutions
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Achievable annual synergies of $30 million expected within three years
Significant Synergy Potential
10
New Revenue Opportunities Operating Efficiencies Corporate Overhead
Cross-selling services
Provide clients with global access
Serve existing clients in new
geographies
Delivery of new revenue from
existing capacity; highly margin
accretive
Overnight utilization of daytime
facilities to serve clients in
different geographies
Consolidation of certain functions
and duplicative overhead
Leverage scale to drive
procurement efficiencies
9
Meaningful opportunity to drive returns from multiple synergy categories, including:
All primarily delivered through existing footprint for highly margin accretive growth
Growth Opportunities of the Combined Business
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Existing Client
Cross-Selling
Deepen and Diversify
Targeted Verticals
Clients With
Global Needs
Utilize expanded service
offering to increase wallet
share with existing clients
Leverage two successful track
records and maintain high
quality service levels to
increase client trust
Gain scale and deepen
presence in overlapping
Telecom, Retail, and Utilities
verticals
Attack unique and under-
penetrated verticals including
Healthcare, BFSI, and
Education verticals
Utilize a truly global platform
to target largest clients with
complex, global needs
10
Numerous near-term growth avenues
Shareholders
Transaction Benefits to All Stakeholders
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Global geographic reach
Extensive, differentiated service offering
Complementary capabilities to serve increasingly
complex client needs
Strong culture promoting entrepreneurial spirit and
servant leadership
Best-of-both-worlds training and operations
Broadened opportunities for career development
Diversified business with scale provides path for
SPPG (sustainable, predictable, profitable growth)
Value creation from expected accelerated growth
and synergy realization; free cash flow expected to
de-lever the business
Employees
Clients
11
STARTEK, Inc.
8200 E. Maplewood Ave,
Suite 100
Greenwood Village, CO 80111
www.startek.com
INVESTOR RELATIONS
Liolios
Sean Mansouri or Cody Slach
949.574.3860
Investor@startek.com
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CONTACT
INFORMATION
12
Appendix A: About CSP
14 13
Significant Sector Expertise
CSP has invested in a number of Technology and Business
Services business, including BPOs with multi country operations
CSP and co-investors acquired 100% of a multi-country (US,
Canada, Philippines & India operations) BPO business MINACS in
2014
CSP exited MINACS through a highly successful strategic sale to
Concentrix (NYSE:SNX) in August 2016, after improving the
EBITDA of MINACS by over 50% in ~2 years
Fund Overview
CSP is a mid-market focused private equity fund manager based
in Singapore, and regulated by the Monetary Authority of
Singapore
CSP’s fund investors are leading global institutional investors,
and its co-investors include Hermes GPE, Partners Group
(SIX:PGHN), AlpInvest Partners, Aberdeen Private Equity –
among others
Appendix B: Reconciliation of STARTEK Non-GAAP Financials
15 14
• This press release contains references to the non-GAAP financial measures of Adjusted EBITDA and Free cash flow. Reconciliation of these non-GAAP
measures to their comparable GAAP measures are included below. This non-GAAP information should not be construed as an alternative to the reported results
determined in accordance with GAAP. It is provided solely to assist in an investor’s understanding of these items on the comparability of the Company’s
operations.
• The Company defines non-GAAP Adjusted EBITDA as net income (loss) plus income tax expense (benefit), interest expense (income), impairment losses and
restructuring charges, depreciation and amortization expense, (gains) losses on disposal of assets and share-based compensation expense. Management uses
Adjusted EBITDA as a performance measure to analyze the performance of our business. Management believes that excluding these non-cash and other non-
recurring items helps investors
• and analysts assess the strength and performance of our ongoing operations.
• Management believes that measures that exclude impairment losses and restructuring charges or other non-recurring items permit a more meaningful
comparison and understanding of our operating performance for the periods presented.
STARTEK, Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures
(In thousands, unaudited)
Three Months Ended Twelve Months Ended
December 31,
2017
December 31,
2016
December 31,
2017
December 31,
2016
Net income (loss) $ (2,452) $ 1,192 $ (1,276) $ 395
Income tax (benefit) expense (371) 384 (436) 718
Interest expense, net 369 530 1,604 1,574
Impairment losses and restructuring charges, net 92 8 520 364
Depreciation and amortization expense 2,697 2,868 11,080 12,250
(Gains) losses on disposal of assets (1) 16 3 (3)
Share-based compensation expense 270 443 1,015 1,722
Adjusted EBITDA $ 604 $ 5,441 $ 12,510 $ 17,020