Media Release
Webjet And Galileo Strengthen And Enhance Relationship
25th January 2006
Webjet today announced that it has acquired exclusive global rights to the Travel Service Aggregator (TSA) software under revised licensing terms with Galileo, a subsidiary of Cendant Corporation.
The key components of the revised arrangements are:
- Webjet has been granted an irrevocable global licence on an exclusive basis for the TSA software.
- Webjet is free to continue development as it sees fit and will own any future modifications which it engineers.
- Webjet will be able to sub licence the Webjet TSA other than to specific competitors of Galileo.
The acquisition of the additional rights relating to the TSA is one of a series of changes to the software development, licensing and share subscription agreements entered into by Galileo and Webjet in February 2003 (as subsequently modified in February 2004).
Under those arrangements, Galileo funded the development by Webjet of the TSA and agreed to license the use of the TSA to Webjet in return for Webjet's agreement, at such later date as determined by Galileo, to issue certain number of ordinary shares to Galileo for a nominal consideration; the actual number of shares to be issued to Galileo was dependent primarily on the price at which Webjet shares were issued to other investors and the time of issue of those shares.
In consideration for Galileo's agreement to the substantial additional benefits gained by Webjet as a result of the changes to the licence arrangements (as described above), Webjet has agreed to issue Galileo a total of 23,718,388 shares for nil consideration. Of those shares 9,000,000 will be held in escrow until 25 September 2006 and a further 10,000,000 shares will be held in escrow until 25 January 2007.
In addition to the above issue of shares, Galileo has also agreed to exercise its right to convert its convertible notes (with a face value of $200,000) into ordinary shares in Webjet at 34.42 cents per share (that being 90% of the volume weight average sale price of Webjet's shares on ASX in the 30 trading day period immediately prior to the date of this announcement). The conversion of the notes will result in the issue to Galileo of a further 581,058 shares.
With its existing holding in Webjet, on completion of the above share issues, Galileo will hold a total of 27,299,446 shares or 10.27% of Webjet's expanded capital of 265,724,774 shares.
This transaction cements the relationship between Webjet and Galileo at both a business and shareholder level. It also satisfies all of the obligations of each party under all previous agreements and provides a commercial platform which materially enhances Webjet's business and development opportunities in Australia and overseas.
In recognition of the close strategic association between the companies Webjet has invited John Guscic, Managing Director Pacific Region of Cendant Travel Distribution Services, to join its Board.
Commenting on the changes, Webjet Managing Director, David Clarke said:
"We are enormously pleased to be able to move our relationship with Galileo to the next level. Our substantially extended rights in relation to the TSA, which has been instrumental in Webjet's enormous growth over the last 18 months, will both protect our competitive position and present various opportunities of a strategic nature."