Posts Tagged ‘Johan Apel’

ChyronHego Acquires Click Effects; 5th Acquisition Since Going-Private

Broadcast Vendor M&A | Posted by Josh Stinehour
Jul 08 2016

ChyronHego has acquired Sound & Video Creations, the provider of the Click Effects family of products used in live sporting venues.  Financial terms of the transaction were not disclosed. ChyronHego Logo

Sound & Video Creations was founded in 1985 and is headquartered in Nashville, Tennessee.  The Click Effects products are used in venues to clickeffects
playback content on arena displays with data-driven graphics.

Customers range from small college athletics such as Rochester Institute of Technology to professional league venues such as Qualcomm stadium, home of the San Diego Chargers.  According to the press release, Click Effects systems are installed in more than 75% of Major and Minor League Baseball teams, almost 65% of NFL, NHL, and NBA stadiums.  The Company’s website lists a total of 896 installations, breaking down by use case as illustrated below.

ce-usecases

The vast majority of the clients listed on the website are located in North America.

This is the fifth acquisitions by ChyronHego since being taken private by Vector Capital in early 2015.  Earlier acquisitions included Newsroom Solutions (9/2015), Vidigo (9/2015), WeatherOne (4/2015), and ZXY Sport Tracking (4/2015).

Johan Apel, president and CEO of ChyronHego, commented “With sports fans paying a premium for tickets to live sports events, there is demand and an expectation for an ever more sophisticated A/V experience once inside the stadium. As a result, solutions for streamlining in-arena productions represent a growth market and an outstanding opportunity for ChyronHego.”

Cliff Wight, president Sound & Video Creations Inc, added “We’re proud of our achievement as the number one provider of stadium A/V solutions in the United States, and now — as part of the global ChyronHego development and sales organization — we’ll have a ready path for expanding our product set on a global basis. Also, ChyronHego’s culture and technology strategy, based on providing a comprehensive software-based ecosystem of integrated solutions, are an ideal fit with our own.”

 

Related Content:

Press release: Chyronhego acquisition of Click Effects

 

 

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ChyronHego Taken Private by PE Firm, Delisted from NASDAQ

Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Mar 09 2015

ChyronHego LogoVector Capital has completed the previously announced $120m deal to acquire ChyronHego and take it private.

Under the terms of the deal, ChyronHego stockholders will receive $2.82 per share in cash, and ChyronHego common stock has ceased trading on the NASDAQ Stock Exchange.

According the definitive proxy statement, the purchase of ChyronHego will be funded by a combination of equity and debt financing.

Equity financing will be provided by Vector Capital and its affiliates, who have committed to pay approximately $49.3m towards the acquisition, and related expenses.

Debt financing is being provided by Silicon Valley Bank (SVB) and Apollo Investment Corporation (Apollo) in the form of a $50m senior secured five-year term loan, which is expected have interest of “either (i) the Eurodollar Base Rate plus 5.625% (subject to a 1.0% floor with respect to the Eurodollar Base Rate), or (ii) at the Adjusted Base Rate (defined as the highest of (w) 2.75% of (x) the Wall Street Journal Prime Rate and (y) the Federal Funds Rate plus 0.50%) plus 3.875%.”

Separately, SVB and Apollo have also providing a $7m senior secured revolving credit facility that has the same terms as the senior five-year term loan. ChyronHego will use the revolving credit facility for working capital and capital expenditures and other general corporate purposes.

In its last quarter as a public company (Q3 2014), ChyronHego posted a net loss of $2.6m on revenue of $14m.

During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue.

In a securities filing, ChyronHego said it ended 2014 with approximately $5.4m in cash and equivalents; and projected that its revenue for the full year 2014 would be $59m.

“We are delighted to be working with Vector Capital,” said Johan Apel, President and Chief Executive at ChyronHego. “As a private company, ChyronHego will be ideally positioned to reinforce the company’s leadership in news, sports and live production solutions. The Vector team has a strong track record of success in acquiring and operating innovative technology companies, and our partnership with them will enable us to reach new levels of scale, technological capabilities and customer service.”

David Fishman, Managing Director at Vector Capital, who will join ChyronHego’s Board of Directors, said: “We believe that as a private company with Vector’s financial support ChyronHego will be well positioned to capitalize on the significant opportunities in broadcast graphics creation, play-out and real time data visualization. Over time, we are confident the company will be well positioned to capitalize on the exciting trends in the sports, news and live television markets.”

“We welcome ChyronHego to the Vector family,” said Nick Lukens, Vice President at Vector. “We are very excited to roll up our sleeves and get to work with the talented team at ChyronHego. Through our partnership with management, we are committed to strengthening and expanding ChyronHego’s market leading product and service capabilities.”

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Related Content:

Press Release: Vector Capital Completes Acquisition of ChyronHego

Certificate of Merger

ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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ChyronHego Makes Revealing Disclosures About “Going-Private” Transaction

Analysis, Annual Results, Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Feb 27 2015

ChyronHego_Logo

In November 2014 broadcast graphics specialist ChyronHego entered into a definitive agreement to be taken private by Vector Capital in an all-cash deal that valued ChyronHego at an equity value of approximately $114m, or $2.82 per share.

Shortly thereafter, six lawsuits challenging the proposed acquisition of the company were filed in the Supreme Court of the State of New York, which were subsequently consolidated into a single case.

The consolidated case alleges that the company’s directors “breached their fiduciary obligations in connection with their approval of the Merger Agreement by entering into a transaction that is coercive and constitutes an unfair and inequitable subversion of shareholders’ rights, and that the entity defendants aided and abetted those breaches.”

ChyronHego and Vector Capital recently entered into a memorandum of understanding (MOU) with respect to a proposed settlement of case, and agreed to provide more information relating to the proposed deal to take ChyronHego private.

According to a recent filing with securities regulators, ChyronHego has now disclosed additional information regarding the proposed deal, including the following:

  • Beginning in November 2013, ChyronHego’s board authorized ChyronHego’s President and Chief Executive Officer Johan Apel to explore ChyronHego’s strategic alternatives

 

  • ChyronHego and Vector Capital entered into a confidentiality agreement in February 2014

 

  • Discussions on the potential of ChryonHego’s management rolling over equity as part of the transaction did not occur with certain other interested parties.

 

  • During a Special Committee (consisting of Independent ChyronHego Directors) meeting in July 2014, the Company’s bankers were informed “Mr. Apel was not happy being the Chief Executive Officer of a publicly traded company.”

 

  • During the “go-shop period,” ChyronHego executives met with two interested parties, neither of which decided to make an offer

 

  • Additional information was provided on the valuation metrics used in the Company’s analysis of the purchase price offered by Vector.

 

 

Excerpts from ChyronHego Definitive Proxy Statement

The broader proxy statement is a lengthy read covering the historical events leading to the proposed transaction, ChyronHego’s rationale for entering the transaction, and additional information on the perspective of the board and management.

Several excerpts are worth highlighting:

  • Since November 2014, ChyronHego’s investment bankers contacted 85 potential buyers: 20 strategic buyers and 65 private equity buyers. Only nine potential buyers entered into confidentiality agreements to review more detailed materials.  None submitted bids for ChyronHego

 

  • In considering the merger, ChyronHego’s board noted the “significant increase in competition in competition in the broadcast graphics creation, playout and real-time data visualization industry over the past two years, which had led in some instances to pricing pressure and discounting on ChyronHego’s products and services, and consistent competition for clients and customers with other companies, such as Vizrt, that were increasingly well-capitalized.”

 

  • The board had concerns on ChyronHego’s access to capital as a small, public company. “Members of the Board believed, based on their experience with the capital markets, that issuers with small market capitalizations and insignificant levels of coverage by investment analysts generally have a more difficult time raising meaningful amounts capital on terms that are not punitively dilutive to their shareholders.”

 

  • ChyronHego provided the following financial projections to Vector Capital:

 

ChyronHego Projections to Vector

 

  • Financing for the transaction will include a rollover of existing management shares in an aggregate value of $23.3 million, an equity contribution by Vector Capital of $49.3 million, a $50 million senior secured loan, and an up to $7 million of senior secured revolving credit loan.

 

 

Thoughts on Transaction

Taken together the disclosures outline a lengthy and thorough process run by ChyronHego’s board and management to seek a buyer or other strategic alternative for the company.

On the question of valuation, the market has spoken.  As a reference, the transaction values ChyronHego at 19.2X LTM (last twelve months) EBITDA and 1.8x LTM revenue. A review of the public disclosures referenced above offers sensible statements by the board and management on concerns of access to greater resources, competitive positioning, and disadvantages of remaining public.

However, shareholder frustration is understandable given the proposed take-private price per share is lower than the 52-week high stock price.

Moreover, the company had previously communicated growth levels and market sizing estimates inconsistent with observable data points in the broadcast technology sector.

For example, the chart below is from ChyronHego’s March 2014 investor presentation, which was still on the company’s website at the time of writing, implies that company believes its addressable market is more than $1 billion.

 

ChyronHego TAM Estimate from 3-14 Investor Presentation

 

On ChyronHego’s Q2 2014 earnings call, CEO Johan Apel confirmed management’s view that the total addressable market was approximately $1 billion, comprised of $250m of broadcast graphics products, and $750m of services. This reiterated estimates made by previous management about the company’s addressable market on its Q2 2008, Q4 2011, and Q2 2012 earnings calls.

However, it is reasonable to conclude ChyronHego was in the process of communicating updated expectations of growth and market sizing.  To their credit, management had already reversed ground and communicated the need to seek other approaches to generate increased in shareholder value.  This led to a series of M&A transactions responsible for substantial all of ChyronHego’s recent growth.

Shareholders will vote on the proposed take-private deal at a special meeting of the company, which is scheduled to be held on March 6, 2015.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14m. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.  For the trailing twelve months (TTM) ended September 30, 2014, ChyronHego had revenue of $58m, comprised of $27.2m of product revenue and $30.8m of service revenue

Assuming the transaction closes, it will be interesting to track developments of ChyronHego with its new owners Vector Capital.

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Related Content:

Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

ChyronHego 8-K: Additional Disclosures Regarding Vector Transactions

ChyronHego: Definitive Proxy Statement on Vector Take-Private Transaction

ChyronHego Investor Presentation March 2014

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

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© Devoncroft Partners 2009 – 2015. All Rights Reserved.

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Broadcast Vendor M&A: ChyronHego to be Taken Private by Vector Capital in $114 Million Deal

Analysis, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
Nov 17 2014

Broadcast graphics specialist ChyronHego announced that it has entered into a definitive agreement with Vector Capital, under which an affiliate of Vector will acquire all of the outstanding shares of ChyronHego common stock for $2.82 per share in cash.

San Francisco-based Vector Capital is a private equity firm with experience in the digital media sector. Recent portfolio investments include Corel and Technicolor. To fund the ChyronHego deal, Vector has secured committed financing consisting of a combination of equity and debt.

This is the second recent take-private transaction of a broadcast graphics provider. Earlier this month. Vizrt announced that it will be taken private by Nordic Capital in a $374m all-cash deal.

The $2.82 per share purchase price represents a premium of approximately 18% over the company’s average closing share price for the six months ending on November 14, 2014, and a 4% premium over the company’s closing share price on November 14, 2014, the last day of trading before the announcement.

Based on the total number of shares outstanding in ChyronHego, the deal equates to an equity value of approximately $114m. After backing out the cash on the company’s most recently published financial statements, this represents an enterprise value of approximately $108m.  On a valuation multiple basis, this is approximately 1.8x trailing 12 month’s revenue.

According to a shareholder FAQ, ChyronHego’s management team will stay the same after the transaction closes. Johan Apel will continue as CEO, and Soren Kjellin will continue as CTO.

The contractual details of the ChyronHego – Vector Capital agreement are complex and worth a longer discussion. We are preparing an analysis of the deal, and we will post this later this week.

A very brief synopsis of certain deal points follow:

  • Technically, the deal is a merger rather than an acquisition. ChyronHego is being merged into an entity controlled by Vector Capital, in order to create a new corporate entity, which will also be owned and controlled by Vector Capital.

 

  • All major shareholders on the ChyronHego management team have agreed to re-invest approximately 50% of their holdings in ChyronHego into the new corporate entity, for which they will receive approximately 31% of the equity in the new entity

 

  • Interestingly the merger agreement includes a “go shop” provision whereby ChyronHego has seven weeks to find a buyer who will offer a higher price than Vector Capital’s offer of $2.82 per share. Given Vizrt’s valuation in the Nordic Capital deal, and the fact that shares of ChyronHego have traded above $3.00 several times during the past year, it is possible that ChyronHego will be able to find a better offer. However, the “go shop” provision includes termination fees that will triggered under specified circumstances such as the acceptance of a superior offer. The company says it does not intend to disclose developments with respect to the solicitation process unless and until a decision has been made in respect to any potential superior proposal. 

 

The transaction is subject to customary closing conditions and most notably the approval by holders of two-thirds of ChyronHego’s outstanding shares and the approval by holders of a majority of shares held by current ChyronHego’s stockholders who will not become stockholders in the going-forward entity.  The Company expects the transaction to close in the first quarter of fiscal 2015.

The company said that its  board of directors and a special committee of the board composed entirely of independent directors have unanimously approved the deal, and have recommend that ChyronHego’s stockholders approve the transaction

“We are very happy to announce this partnership with Vector Capital, an established global technology oriented private equity firm that is focused on building long-term value. Our management is convinced that this is the right opportunity at the right time for ChyronHego’s customers, employees and stockholders,” said Apel.

In the third quarter of 2014, ChyronHego posted a net loss of $2.6m on revenue of $14m. During the first nine months of 2014, ChryronHego posted a net loss of $2.8m on revenue of $43.3m.

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Related Content:

ChyronHego Investor FAQ and Introduction to Vector Capital

Agreement and Plan of Merger: ChyronHego Corporation, Vector CH Holdings (Cayman), L.P., And CH Merger Sub, Inc.

ChyronHego SEC Filing: Entry into a Material Definitive Agreement with Vector Capital

ChyronHego One Year Stock Price Chart

Broadcast Vendor M&A: Vizrt to be Taken Private in $374 Million All-Cash Deal

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© Devoncroft Partners 2009 – 2014. All Rights Reserved.

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ChyronHego CEO to Step Down at End of 2013

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Sep 04 2013

Michael Wellesley-Wesley, who has served as CEO of Chyron (now ChyronHego) for the past 10 years, will retire at the end of 2013, when his current employment agreement expires.  He will remain on the company’s board of directors.

Wellesley-Wesley will be replaced as CEO by current ChyronHego president Johan Apel, who was the chairman and CEO of Hego AB prior to Chyron’s merger with Hego earlier this year.

“The recent completion of the combination of Chyron and Hego unites two pioneering companies to create a global leader in broadcast graphics creation, playout and real-time data visualization,” said Wellesley-Wesley. “This is a truly transformative leap forward, and it presents an appropriate opportunity to define an orderly succession whereby the leadership responsibilities for the combined company transfer to Johan Apel. Johan is superbly well qualified to develop and execute the vision, the strategies and operating concepts for ChyronHego in ways that will allow us to simultaneously address the evolving needs of customers and the expectations of our shareholders.”

According to his most recent employment contract, Wellesley-Wesley receives a base salary of $482,850 per year, as well as incentive bonus.

Wellesley-Wesley is also eligible for bonus payments under Chyron’s 2013 Management Incentive Compensation Plan, which is triggered if the company achieves certain GAAP revenue and budgeted non-GAAP cash flow targets. According to this plan Wellesley-Wesley is eligible to receive up to 70% of his base salary, or $337,995, if both targets are met at the 100% level.  If these targets are exceeded, by 25% or more the payout will increase by an additional 50 percent.

In August 2013, the company disclosed that during the first half of fiscal 2013, excluding the results of operations for Hego, which was acquired on May 22, 2013, Chyron achieved 106% of the target first half of 2013 GAAP-basis revenues objective and achieved 366% of the target first half of 2013 non-GAAP cash flow objective.  As a result, Wellesley-Wesley “earned an incentive compensation award of $221,231, of which the company remitted payroll withholding taxes on his behalf of $91,191 and paid him the balance of $130,040 in company common stock, based on the August 6, 2013 closing market price of $1.59 per share, resulting in the issuance of 81,786 shares.”

At that same time, Chyron terminated the 2013 Management Incentive Compensation Plan, and published a new management incentive compensation plan for the second half of 2013.  This was done to include new executive officers and management and align the interests of all members of management, including certain members of management that became executive officers of the Company upon the consummation of the business combination with Hego during the second quarter of 2013.

The targets for the new plan are also based on “budgeted GAAP-basis revenues for the second half of the fiscal year ending December 31, 2013, and budgeted Non-GAAP cash flows from operating activities for the second half of the fiscal year ending December 31, 2013.

If both targets are achieved, Wellesley-Wesley is eligible for 70% of his base salary, or $168,998 (at 100% achievement of both performance conditions).

Chyron reported a net loss of $2.1m in the second quarter of 2013 on revenue of $10.7m, up 39% versus the same period a year ago, and up 34% versus the previous quarter.

The company’s net loss and operating loss in the second quarter of 2013 were both impacted by transaction costs associated with Chyron’s merger with Hego AB. The company says that when one-time costs,  including Hego merger-related expenses, restructuring costs and a valuation adjustment for contingent consideration related to the Hego merger in second quarter results, it posted net income of $800,000, and an operating profit of $900,000.

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Related Content:

Press Release: Press Release: ChyronHego CEO Michael Wellesley-Wesley to Retire Effective December 31, 2013; Board Selects Johan Apel as Successor

Michael Wellesley-Wesley Employment Agreement with Chyron Corporation

Chyron Corporation: 2013 Management Incentive Compensation Plan

ChyronHego Corporation Second Half of 2013 Management Incentive Compensation Plan

ChyronHego Avoids NASDAQ Delisting as Shareholder Equity Rises After Merger

Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Chyron – Hego Stock Purchase Agreement

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Michael Wellesley-Wesley Change in Control Agreement – May 23 2013

Michael Wellesley-Wesley Change in Control Agreement – November 19, 2012

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More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Broadcast technology vendor financials, Broadcast Vendor M&A | Posted by Joe Zaller
Mar 11 2013

Chyron announced that it has signed a definitive agreement to acquire Stockholm-based Hego Group, a provider of graphics and data visualization solutions for TV and sports, in an all-stock deal.

The company’s referred to the deal as a merger in its press release, and announced that it will rename the combined company ChyronHego.

Hego Group chairman and CEO Johan Apel, will become president and COO of ChyronHego, and will also get a seat on the company’s board of directors. . Michael Wellesley-Wesley, president and CEO of Chyron, will remain as ChyronHego CEO.

 

All Stock Deal with Three-Year Earn-Out

Under the terms of the deal, Chyron will issue a number of shares of Chyron common stock which will represent 40% of its aggregate shares of common stock outstanding, including certain outstanding options, after the closing, in exchange for all of Hego’s outstanding capital stock.

The deal also includes an earn-out provision whereby Hego shareholders will be entitled to receive additional shares of Chyron stock (up to a total of 50% of the aggregate shares outstanding) for achievement of certain revenue milestones during 2013, 2014 and/or 2015.

 

Combined Company Financials

Hego, which has about 100 employees, had revenue of $14.8m in 2012, up 37 percent from 2011.  Hego posted an operating profit of $1.6m in 2012.

Chyron posted an operating loss of $3.7m in 2012 on revenue of $30.2m

This implies the total 2012 performance of the enlarged company was revenue of approximately $45m, and an operating loss of $2.1m.

 

“The merger of Chyron and Hego brings together two pioneering companies to create a global leader in broadcast graphics creation, playout, and real-time data visualization. This is a truly transformative transaction for Chyron,” said Michael Wellesley-Wesley. “By combining the teams and resources of Chyron and Hego, we will deliver to our customers a highly diverse and compelling broadcast graphics capability.”

“With this merger, we are looking forward to integrating Hego and Chyron solutions and working together to innovate new products and services,” stated Johan Apel, chairman and CEO of Hego Group. “Our objective is to develop powerful, easy-to-use solutions for sports, news and live TV. Hego has grown quickly over the last few years but this merger takes us to a whole new level, especially in North and South America where our offerings have been generating significant interest. We’re excited about this combined company and I believe that our customers are the real beneficiaries.”

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Related Content:

Press Release: Chyron to Acquire Hego Group

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

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