Ai-Media to acquire EEG Enterprises for up to $34 million.

SYDNEY: Access Innovation Holdings Limited (Ai-Media), a global provider of technology-driven live and recorded captioning, transcription and translation services, has entered into a binding agreement to acquire 100 per cent of the shares in EEG Enterprises Inc. (EEG) for up to US$34.0 million in cash, Ai-Media shares and potential earn-outs, a news release said.

The acquisition of EEG, a leading North American provider of captioning technology, will establish Ai-Media as a vertically integrated provider of captioning technology, with a full suite of products to match customer requirements.

The acquisition will be immediately earnings accretive on an EBITDA basis, while significantly increasing recurring revenue streams and delivering Ai-Media new growth opportunities, particularly in the crucial North American market.

The Acquisition consideration is structured as follows:
• an initial cash payment of US$20.0 million on completion;
• US$10.0 million in Ai-Media shares, pending shareholder approval at an Extraordinary
General Meeting to be held in June 2021; and
• an earn-out payment of up to US$4.0 million subject to EEG achieving revenue and margin growth rate hurdles, payable in cash following the release of Ai-Media’s FY22 financial results.

The Acquisition will be fully funded by an equity raising of A$40.0 million, comprising an underwritten institutional placement of A$20.0 million and an underwritten accelerated renounceable entitlement offer (without retail rights trading) of A$20.0 million at a ratio of 1 new share for every 5.79 existing shares held by eligible shareholders on the record date .

The Equity Raising will be conducted at an offer price of A$0.80 per share, which represents a 14 per cent discount to Ai-Media’s last closing price and a 10.8
per cent discount to the Theoretical Ex-Rights Price (“TERP”)

It is anticipated that the Equity Raising will be completed by 27 May 2021. The Acquisition will complete at the time that Ai-Media pays the cash consideration of US$20.0 million to the EEG vendor (which it has 45 business days from the date of the Acquisition agreement to do).

Ai-Media intends to pay the cash consideration and complete the Acquisition immediately on receipt of funds from the Institutional Entitlement Offer and Placement.

Ai-Media Co-founder and Chief Executive Officer Tony Abrahams said the acquisition of EEG represented a step change for Ai-Media, significantly strengthening its technology portfolio and opening up growth opportunities in new markets.

“Over four decades, EEG has established itself as the market-leading provider of video and captioning services in North America, serving major enterprise, government, defence and broadcast media clients. EEG’s on-premises and cloud-based technology perfectly rounds out Ai-Media’s live captioning product suite, complementing our premium human-curated service and our recently launched Smart ASR product to enable us to meet any customer

We’re delighted to welcome Phil and the entire EEG team to Ai-Media and look forward to working with them to take advantage of the growth opportunities presented by the
alignment of two businesses with highly complementary products and customers and a culture of success.”

EEG Chief Executive Officer Phil McLaughlin said: “Working with Ai-Media over the past five years, we have come to recognise our shared values in terms of developing proprietary technology and delivering the best products, services and support for customers. EEG and
Ai-Media’s technology suites are entirely complementary, allowing us to meet the full range of customer requirements. We’re excited about the growth potential of the combined
business and look forward to being part of this next chapter in our company’s history.”

Founded in Australia in 2003, technology company Ai-Media has become a global leader in the provision of high-quality live and recorded captioning, transcription and translation services. Its technology platform combines artificial intelligence and human expertise to deliver speech-to-text accuracy.

The company is the biggest captioning provider in the Australian market, with clients including major free-to-air and pay television networks, and has a growing international footprint, with offices in Australia, the US, UK and Canada.

Globally, it provides captioning for around 1 million minutes of live and recorded media content, and online events and web streams, every month. Ai-Media (ASX:AIM) commenced trading on the ASX on 15 September 2020.

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