DAVIS + HENDERSON ANNOUNCES DIVESTITURE AND RESTRUCTURING TO ACHIEVE FURTHER BUSINESS INTEGRATION
TORONTO, Oct 7, 2010 (Canada NewsWire via COMTEX) – Stock Exchange Symbol: DHF.UNWebsite: www.dhltd.com. Davis + Henderson Income Fund (“D+H”) today announced that it has sold a non-strategic part of its contact centre operations, and that in support of its company-wide integration activities following last year’s acquisition of Resolve Outsourcing Income Fund (“Resolve”), it intends to record an unrelated restructuring charge.
In a transaction that closed today, D+H has sold the operations of its Charlottetown-based contact centre business to Atelka Inc. of Montreal. Originally acquired in 2009 as part of the Resolve acquisition, this operation primarily served non-core markets for D+H. Total annual revenues from the divested business are under $20 million, or less than 3% of D+H’s consolidated annualized revenues. While financial terms of the transaction were not disclosed, the business was sold for an amount approximately equal to its book value, excluding transaction fees and other transition costs. D+H and the buyer have entered into a transition services agreement in order to facilitate the movement of certain staff activities and operations that are presently integrated within other D+H service areas. This operation, and the related transition activities, will be accounted for in D+H’s third quarter results as a discontinued business.
“By completing the divestiture now to Atelka, we are selling a solid business to a company that specializes in serving leading telecom companies and retailers,” said Gerrard Schmid, President and Chief Operating Officer for D+H. “Accordingly, we believe this is a positive development for D+H, Atelka, and for the customers and employees of the Charlottetown operations.”
To further advance its corporate-wide integration and transformation activities, D+H expects to record a restructuring charge in the $7-9 million range. These activities are designed to better position the business going forward to serve customers and improve the effectiveness, efficiency and scalability of its operations. Approximately $2 million of the restructuring charge will be recorded in the third quarter of 2010 with the balance recorded in the fourth quarter. The annualized savings associated with these initiatives are expected to be $3-4 million and will be achieved by the end of 2012.
“With organic initiatives and the completion of four acquisitions over the past four years, D+H has significantly expanded its service offerings and its operations while realizing considerable synergistic savings from the elimination of management duplication and centralization of corporate functions,” said Bob Cronin, Chief Executive Officer of D+H. “These accomplishments were achieved even though our service areas primarily operated as distinct units. In order to fully capitalize on our opportunity, we must continue to position the business to be even more operationally effective. For example, we are presently bringing six hundred of our technology people, who until now have been spread over five locations, together into one location. We believe it is initiatives like this that will significantly enhance effectiveness for our customers and continue to create value for our owners.”
About Davis + Henderson
Founded in 1875, Davis + Henderson provides innovative programs, technology products, and technology based business services to customers in the financial services industry who offer deposit, lending, insurance and wealth management products to consumers and businesses. Davis + Henderson Income Fund is listed on the Toronto Stock Exchange under the symbol DHF.UN. Further information can be found in the disclosure documents filed by Davis + Henderson Income Fund with the securities regulatory authorities, available at www.sedar.com.
Caution Concerning Forward-looking Statements
This news release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Statements concerning Davis + Henderson’s objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of Davis + Henderson are forward-looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “may”, “will”, “would” and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of Davis + Henderson to meet its revenue and EBITDA targets; general industry and economic conditions; changes in Davis + Henderson’s relationship with its customers and suppliers; pricing pressures and other competitive factors. Davis + Henderson has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While Davis + Henderson considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Business, or developments in Davis + Henderson’s industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Risks related to forward-looking statements include, among other things, challenges presented by declines in the use of cheques by consumers; the Fund’s dependence on a limited number of large financial institution customers and dependence on their acceptance of new programs; strategic initiatives being undertaken to meet the Fund’s financial objective; stability and growth in the real estate, mortgage and lending markets; as well as general market conditions, including economic and interest rate dynamics and investor interest in, and government regulations relating to, Income Trusts. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and Davis + Henderson does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.
SOURCE: Davis + Henderson Income Fund
Bob Cronin, Chief Executive Officer, Davis + Henderson, Limited Partnership, Tel: (416) 696-7700
Gerrard Schmid, President & Chief Operating Officer, Davis + Henderson, Limited Partnership, Tel: (416) 696-7700
Brian Kyle, Executive Vice President and Chief Financial Officer, Davis + Henderson, Limited Partnership, Tel: (416) 696-7700