Contactless microprocessor-based smart card solutions provider OTI - On Track Innovations (Nasdaq:OTIV; XETRA:OT5) announced today that it has entered into two agreements that put into play its new strategic focus on the vertical markets of payment, petroleum and smart ID solutions.
The first agreement relates to OTI’s purchase of ASEC Spolka Akcyjna from Nextel Spolka Akcyjna, headquartered in Krakow, Poland. ASEC is a software company that provides complimentary solutions to OTI in the form of software and back office systems for mass transit ticketing and payment solutions.
OTI stated that the acquisition of ASEC would enable it to provide the required local support service for programs in the emerging European markets and better position OTI to also provide complete solutions in these markets for its petroleum and smart ID solutions.
In exchange for all of the outstanding shares of the capital stock of ASEC, OTI will issue to Nextel S.A. OTI ordinary shares having an aggregate market value of between $1.6 million and $1.95 million. The exact amount will depend upon the level of EBITDA achieved by ASEC during 2004 and 2005.
The second agreement relates to the sale of OTI’s wholly-owned German subsidiary, InterCard Kartensysteme GmbH. This subsidiary is engaged in the sale and support of closed campus systems. OTI noted that the market was considered to be a highly one, with relatively low margins and high operating expenses.
OTI will retain its InterCard Systemelectronic GmbH subsidiary, which it said was profitable. InterCard Systemelectronic provides OEM and electronics manufacturing services.
OTI president and CEO Oded Bashan said, “The divestiture of our Intercard Kartensysteme subsidiary will enable us to concentrate our resources in areas that we believe to be more promising and potentially more profitable”.
The proceeds payable to OTI for the outstanding shares of InterCard Kartensysteme are expected to be approximately $2.5 million.
OTI stated that the transactions were expected to improve the company’s long-term profitability, (with some decrease in revenues in the short term), by adding a profitable company with higher margins and recurring revenue businesses, and by selling an existing division with high operating expenses due to a mix of revenues originating from a large number of limited size projects and products with relatively low margins.
Published by Globes [online] - www.globes.co.il - on Monday, September 20, 2004