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GTY Technology Extends Deadline to Complete a Business Combination
Thursday 08 November 2018

8 November 2018 - Texas, US-based special purpose acquisition company GTY Technology Holdings Inc.'s (NASDAQ: GTYH) shareholders have approved an extension of the date by which it must consummate a business combination from 1 November 2018 to 1 May 2019, the company said.

GTY requested the extension in order to complete the previously announced proposed transactions with Bonfire Interactive Ltd., CityBase, Inc., eCivis Inc., Open Counter Enterprises Inc., Questica Inc. and Questica USCDN Inc., and Sherpa government Solutions LLC. 

In connection with the extension, holders of 34,011,538 shares of GTY's class A ordinary shares exercised their redemption rights, resulting in a total of approximately USD 216.8m remaining in GTY's trust account.

GTY, which is led by William D. Green, Joseph M. Tucci and Harry L. You, raised USD 552m in its IPO in November 2016.

After an extensive search process, the sponsors elected to bring together best-in-class companies to establish an integrated software solution in the highly fragmented and underpenetrated public sector market.

With a diverse combined client base of over 1,500 clients, the combined company will be a scaled software platform for state and local governments, helping them to address increasing demands by constituents for improved citizen experiences and more efficient operations.

GTY will form a new entity which will acquire Bonfire Interactive Ltd., based in Canada, a developer of cloud-based eSourcing and procurement software that helps purchasers find, engage, and evaluate suppliers and manage the resulting contracting and performance relationships.

Also, CityBase, Inc., based in Chicago, IL, a developer of technology, payment and communication channels and aggregator of operational data that also creates websites and mobile applications for utilities, self-service kiosks and point of sale tablets with customized solutions.

eCivis Inc., based in Pasadena, CA, a cloud-based grants management system provider for state, local and tribal governments that also offers writing, consulting and professional services as well as financial and program performance tracking, cost allocation and budgeting.

Open Counter Enterprises Inc., based in San Francisco, CA, a builder of user-friendly software to guide applicants through complex permitting and licensing procedures.

Questica Inc. and Questica USCDN Inc, based in Canada, a provider of budgeting software, performance management and transparency and data visualization solutions.

Sherpa government Solutions LLC, based in Denver, CO, a provider of public sector budgeting software and consulting services.

Under the definitive agreements, subject to customary adjustments as provided therein, GTY has agreed to acquire the companies for total aggregate base consideration of USD 365m in cash and stock, plus an aggregate earn-out consideration of up to USD 132m in cash and stock.

In addition, the new entity is expected to have an equity incentive plan in place at closing with 5.3m shares reserved for future awards to employees and other plan participants.

In connection with the business combination, GTY expects to hold a special meeting of its warrantholders (to be held immediately prior to the special meeting of GTY's shareholders for the business combination) to approve an amendment to the warrant agreement governing its outstanding warrants to provide that, at the closing of the business combination, each whole public warrant will be automatically exchanged for USD 1.35 in cash and each private placement warrant will be automatically exchanged for USD 0.75 in cash.

Approval of the warrant agreement amendment will require the affirmative vote of at least 50% of the outstanding public warrants.

Assuming no GTY stockholders exercise their redemption rights in connection with the business combination and GTY obtains warrantholder approval to amend its warrant agreement, the combined company is expected to have approximately USD 237m of cash on the balance sheet at the closing to fund earnings producing capital expenditures, salesforce expansion, future acquisitions to accelerate growth, and general corporate purposes.

Citigroup Global Markets Inc. served as the sole book-running manager for GTY's initial public offering and was a financial advisor to GTY on the business combination. Winston and Strawn LLP is acting as legal counsel to GTY.
Date Published: 08/11/2018
Target: Bonfire Interactive, CityBase, eCivis, Open Counter Enterprises, Questica and Questica USCDN and Sherpa government Solutions
Country: USA
Deal Size: 365m (USD)
Sector: Computer Software
Type: Corporate acquisition
Financing: Cash and Stock
Status: Agreed
Buyer: GTY Technology Holdings
Buyer Advisor: Citigroup Global Markets , Winston and Strawn