Goldmoney is pleased to announce that the Company has entered into an Acquisition Agreement to acquire Schiff Gold Inc. ("SGI") and form a marketing and service agreement with Peter Schiff. SGI is a private, U.S.-based dealer in precious metals (formerly launched in 2010 as Euro Pacific Precious Metals), one of the largest and fastest growing retail gold dealers, and services a large client base with buy and sell orders for precious metals, storage and vaulting arrangement, and gold & silver IRA arrangement services. Upon closing of the transaction, the Company will also enter into a Marketing and Service agreement with Peter Schiff, where Mr. Schiff will integrate and endorse Goldmoney services for clients and subscribers across various companies and media platforms.
The acquisition of Schiff Gold is expected to add significant revenue and increase the Company's gross profit and free cash flow generation. In 2015 alone, Schiff Gold sold over $125 million1 in precious metals, generated $2.8 million1 of gross profit and paid cash distributions of $0.975 million1 to its shareholders. Goldmoney believes there to be cost savings derived from the business combination that should result in additional operative leverage and margin expansion at the Schiff Gold business. As an example, the present Schiff Gold business generates its sales through wire transfer deposits and invests very little in marketing. Additional financial information relating to the existing gold business will be released upon closing.
"Peter is the LeBron James of the gold market with hundreds of thousands of trusted followers and an unrivaled track record in predicting some of the most important macroeconomic events of the last 20 years. Following an initially heated public debate in March, Peter and I struck a private friendship. Through in-person meetings and many thoughtful conversations it became clear to both Peter and I that we shared the same vision and goals, that Peter was motivated by the same mission that guided us, and that his business and brand could be better leveraged using the Goldmoney technology. I am extremely excited to be welcoming Peter to the Goldmoney tent and I believe his millions of followers will be much better monetized through a platform that can economically service a global user base with no minimums, superior technology, and multiple deposit and redemption options. We will unveil the full combination strategy at closing," said Roy Sebag.
"I'm thrilled to be joining the Goldmoney team," said Peter Schiff. "For my entire career I have sold gold to high net worth individuals looking to incorporate precious metals into otherwise diversified investment portfolios. While the vast majority of investors have yet to make such an important allocation shift, its average individuals who actually have the most to gain by utilizing the protection of gold for day to day savings of income. The Goldmoney platform provides this utility, simple and transparent access to the best possible defense against theft by inflation. Technology is providing more choice and easier access to everything, and the hope is that market forces will compel central banks to provide a more competitive product and put the brakes on run-away-inflationism and the asset-bubble economics that is undermining living stands world-wide."
"We are excited to welcome Peter Schiff as an important stakeholder and advocate of the Goldmoney mission to democratize access to gold," said Josh Crumb, Chief Strategy Officer. "Roy and I are grateful for the growing support and confidence among the gold community, and look forward to Peter's thought leadership and collaboration with Goldmoney stakeholders James Turk, Eric Sprott, Albert Friedberg, John Butler, Alasdair Macleod, Stefan Wieler, and our many notable shareholders."
The transaction has been structured as a joint venture between Peter Schiff and Goldmoney, with a consulting agreement between Goldmoney and Euro Pacific Asset Management LLC. The joint venture will be issued 1,063,000 common shares of Goldmoney with a deemed value of $5,315,000 (equivalent to CAD $5.00 per share), as well as 1,400,000 common share purchase warrants ("Warrants") as follows: (i) 700,000 Warrants exercisable at CAD $5.00 per share for a period of 10 years; (ii) 350,000 warrants exercisable at CAD $5.25 per share for a period of ten years; and (iii) 350,000 warrants exercisable at CAD $5.80 per share for a period of ten years. Peter Schiff will have the right to be distributed the Goldmoney securities by the joint venture.
The first 700,000 common shares of the 1,063,000 shares are subject to one-third automatic releases on each of the first, second and third anniversaries of the closing. All of the above-noted 1,400,000 Warrants and the remaining 363,000 common shares are subject to performance vesting over a three-year period in accordance with performance criteria under a consulting agreement to be entered into between Goldmoney and Euro Pacific Asset Management LLC. Pursuant to the consulting agreement, Euro Pacific Asset Management LLC will provide strategic development, product development, branding and marketing services to Goldmoney. Euro Pacific Asset Management LLC shall be paid fees equal to 50% of the distributable income from Schiff Gold Inc. with a minimum term of twenty years. For a period of five years after the twentieth anniversary of closing, Goldmoney shall have the right, but not the obligation, to terminate the consulting agreement in consideration for a payment equal to the average of distributable income over the prior five years.
The transaction is subject to customary commercial closing conditions including regulatory approval, and is expected to close within 45 days.