CSG to use cash, new bank loans for $372 million acquisition of Intec

By Jennifer Lanning Drey

Savannah, Ga., Sept. 24 - CSG Systems International, Inc. will use at least $130 million of its cash along with a new $300 million bank facility to acquire Intec Telecom plc in an all-cash offer valued at roughly $372 million, Randy Wiese, CSG's chief financial officer, said during a company conference call held Friday.

CSG has entered into a $200 million term loan facility and $100 million revolving credit facility as part of the transaction, Wiese said.

The combined company will have an estimated cash and liquid investment balance of $175 million and $430 million par value in debt, he said.

"Based on these totals and the expected cash flows generated by the combined company, we are comfortable with this level of leverage," Wiese said.

"We will continue to have a very strong balance sheet and capital base after the transaction, which will allow us to be very flexible in our use of cash," the CFO added during the question-and-answer portion of the call.

CSG will look for opportunities to manage its debt going forward, but the company's primary use of cash will be opportunities to expand its capabilities closer to its clients, he said.

The agreement with Intec includes a break-up fee between $3.5 million to $4 million, depending on the exchange rate.

Strategic rationale

CSG's acquisition of Intec will enhance long-term growth opportunities for both companies while allowing the combined entity to serve a diverse set of customers, CSG's chief executive officer Peter Kalan said during the call.

No one customer will represent more than 20% of the combined company's revenues, he noted.

Intec is a United Kingdom-based supplier of retail billing, interconnect billing, convergent mediation and other enterprise software solutions, primarily to the global telecommunications industry.

"We believe this combo creates a global leader with significant scope and scale across multiple geographies and multiple customer segments," Kalan said.

Intec will provide CSG an immediate presence in emerging markets and a sizable international presence, he said.

The CEO also noted that while the acquisition is larger than CSG's most recent acquisitions, the company undertook the same process in evaluating its benefits.

CSG expects the transaction to close by the end of 2010.

Based in Englewood, Colo., CSG provides software- and services-based solutions for the management of customer interactions.

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