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| Subject: American Express adopts Protons Prisma 1st quarter 2003. | |
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Author: anonymous |
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Date Posted: 00:39:03 10/19/02 Sat http://www.theage.com.au/articles/2002/03/19/1016519810092.html ------------------------------------------------------------ News of Proton deal fails to halt ERG's slideBy Ian Porter March 20 2002 ------------------------------------------------------------ ERG's share price slumped to record lows yesterday even as directors announced the company had bought the Proton World technology company in a deal that could generate revenue of as much as $200 million over the next seven years. ------------------------------------------------------------ Investors dumped the shares after ERG's auditor said there was "significant uncertainty" about the company's status as a going concern. The shares were clipped another 2.5 cents to 23.5 cents and market capitalisation shrank to $200 million. ------------------------------------------------------------ Yet, while shareholders were deserting ERG, directors simultaneously announced they had completed the acquisition of Proton World for a headline figure of $58.8 million plus 75.5 million ERG shares. ------------------------------------------------------------ However, the ultimate price is linked to ERG's share price and, if it does not recover significantly in three years, the cash component of the price will rise sharply. ------------------------------------------------------------ The Proton deal was significant on two counts, directors said. First, the vendors that become ERG shareholders under the deal include powerful financial institutions such as American Express, Visa, Banksys and Interpay. ------------------------------------------------------------ Second, technology supply agreements with Banksys and Interpay - Amex is close to signing - will generate revenue of around $200 million over the life of the contracts, which vary between five and seven years. ------------------------------------------------------------ Amex has already announced it will adopt Proton's new Prisma technology for its smartcards when Prisma is released in the first quarter of 2003. ------------------------------------------------------------ "We are focused on building our levels of recurring revenue, and the long-term contracts to be entered into as part of this transaction are a significant addition on that front," said ERG managing director Peter Fogarty. ------------------------------------------------------------ "Our existing customers are increasingly looking for multifunction capability in their smartcards. Closing this transaction gives ERG control of two of the most powerful technologies in the industry." ------------------------------------------------------------ Proton was created by Banksys, a consortium of 58 Belgian banks, and has strong presence in the banking sector. Interpay is the Dutch equivalent. ------------------------------------------------------------ Proton's close liaison with the banks and the credit card companies put it in a good position as European banks worked towards a transparent system of smartcards by 2005, ERG spokesman Shaun Duffy said yesterday. ------------------------------------------------------------ The 36 million Proton-based smartcards on issue around the world are expected to rise to 100 million by 2005. ------------------------------------------------------------ Under the Banksys and Interpay agreements - and the Amex deal when completed - Proton will receive revenue from fixed annual payments, upfront fees, exclusivity fees, maintenance fees, development fees and service fees. ------------------------------------------------------------ The reporter holds ERG shares. ------------------------------------------------------------ [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| Protons Prisma released 1st 1/4 03 American Express will use it. | anonymous | 00:57:00 10/19/02 Sat |
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