EXHIBIT 99.1
Thursday March 23
Company Press Release
DIALOG REFOCUSES ON FAST GROWING TECHNOLOGY DIVISIONS; SELLS
INFORMATION SERVICES DIVISION TO THE THOMSON CORPORATION AND RAISES
$44 MILLION TO FUND COMPANY TO BE NAMED BRIGHT STATION PLC
LONDON & CARY, N.C. -23 March, 2000 -- The
Dialog Corporation (LSE: DLG, NASDAQ:DIAL), a
leading provider of Internet-based information,
technology and e-commerce solutions, today
announced the proposed refinancing and
restructuring of the Group through the sale of
its Information Services Division (ISD) to The
Thomson Corporation [TSE: TOC] which will
enable the repayment of all the Group's
outstanding senior and high yield debt.
Separately, Dialog reported financial results
for the year ended December 31, 1999.
The overall effect of these proposals is to
reposition the Group - which will be renamed
Bright Station plc
(http://www.brightstation.com) - to focus on
its eCommerce and Web Solutions businesses,
with an additional (pound)27.9 ($44) million of
new equity investment. These divisions can now
be developed to their full potential. The Board
is also proposing the creation of an investment
business that will focus on developing
promising Internet and eCommerce start-ups,
leveraging the Company's leading edge
technologies, management experience and new
capital.
The following is a summary of the details of
the agreements and proposed actions:
o The sale of the Information Services
Division (ISD) for $275 million in cash to
The Thomson Corporation.
o The formation of a strategic alliance with
The Thomson Corporation consisting of:
o An equity investment of (pound)15.9
($25) million in Bright Station plc
o Licensing agreements for Bright
Station's technologies and software
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o The provision of content reseller
rights to Bright Station
o The consideration for the sale will be used
to settle the Group's outstanding high
yield and senior debt obligations in full.
A (pound)12 ($19) million equity investment
in Bright Station by JIYU
o Holdings, a company involved in numerous
global high technology businesses.
o Bright Station will retain all of Dialog's
eCommerce (ECD) and Web Solutions (WSD)
technology assets and brands - including
InfoSort(R), Muscat(R), WebTop(R),
WebCheck(R), Sparza(R), OfficeShopper(R)
and the Knowledge Management business.
o Combined WSD and ECD revenues, which will
form the core of Bright Station assuming
shareholder and bondholder approval of the
pending ISD sale to Thomson, rose
significantly to (pound)9.3 million in
1999, compared to (pound)4.1 million in
1998.
o The creation of a new Internet Ventures
Division (IVD) offering a unique
combination of the Company's technologies,
management expertise and capital to support
new Internet and eCommerce start-ups.
o The appointment of entrepreneur and
Internet venture capitalist Matthew Freud
(Oxygen Holdings) to the investment panel
of the Bright Station IVD, and
Dialog/Bright Station Chief Executive Dan
Wagner will be appointed to the investment
panel of Oxygen Holdings.
o Proposals are subject to shareholder and
bondholder approval.
Allen Thomas, Chairman of The Dialog
Corporation, stated:
"The Company has many exciting opportunities
across all of its divisions, which we have
largely been unable to capitalise upon due to
Dialog's highly leveraged capital structure,
dating back to the Knight-Ridder Information
acquisition. After months of in depth review
and discussions with multiple parties, the
Board is pleased to present an exciting plan to
resolve the Group's capital constraints while
also positioning the Company, with a strong
capital footing, to pursue a range of
attractive high growth opportunities rooted in
the Group's broad base of technology, service
and personnel assets.
Bright Station's experienced and
entrepreneurial executive team will now be able
to focus their energies on building our
fast-growing Web Solutions (WSD) and eCommerce
divisions (ECD). This will enable the Company
to capitalise on our cutting-edge portfolio of
technologies and services in order to pursue
the myriad market opportunities afforded by
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the digital economy and leveraging the added
value that will come from the new Internet
Ventures Division (IVD). We will pursue a
strategy of value creation that will involve
seeking independent public listings and/or
strategic alliances for the various business
units at the appropriate stage in their
respective development.
Further, by aligning the new Group with an
alliance with Thomson, one of the world's
information industry leaders, Bright Station
will be provided with a range of financial,
strategic and operational benefits.
In summary, after a full and thorough
examination of the opportunities available to
the Company over the last year, the Board is
confident that these proposals represent the
best possible way forward for the Group and are
in the best long-term interests of our
shareholders, customers and employees."
For further information please contact:
The Dialog Corporation plc
Dan Wagner, Chief Executive
0171 930 6900
dan_wagner@dialog.com
David Mattey, Finance Director
0171 930 6900
david_mattey@dialog.com
Investor Relations
The Hogarth Partnership (UK)
John Olsen
0171 357 9477
jolsen@hogarthpr.co.uk
Jaffoni and Collins (US)
David Collin
(212) 835 8500
dial@jcir.com
The full details are as follows:
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Introduction -
The Dialog Corporation, a leading provider of
Internet-based information, technology and
e-commerce solutions, today announced the
proposed refinancing and restructuring of the
Group through the sale of its Information
Services Division (ISD) to The Thomson
Corporation which will enable the repayment of
all the Group's outstanding senior and high
yield debt.
The overall effect of these proposals is to
reposition the Group - which will be renamed
Bright Station plc
(http://www.brightstation.com) - to focus on
its eCommerce (ECD) and Web Solutions (WSD)
businesses, with an additional (pound)27.9
($44) million of new equity investment. These
divisions can now be developed to their full
potential. The Board is also proposing the
creation of an investment business that will
focus on developing promising Internet and
eCommerce start-ups, leveraging the Company's
leading edge technologies, management
experience and new capital.
The directors believe that the sale of ISD
represents the best way forward as a means to
addressing the Group's debt burden and
unlocking the potential of all the divisions.
The divestiture and new equity investments are
conditional upon a number of matters including
the approval of Dialog's shareholders, which
will be sought at an Extraordinary General
Meeting (EGM) of the Company. A circular
detailing the transaction and containing a
notice convening an EGM, at which resolutions
to approve the Sale will be proposed, will be
sent to shareholders in due course.
Background and Rationale For Strategic
Repositioning
a) Knight Ridder Information acquisition
In November 1997, the Company acquired the
Knight Ridder Information Inc. (KRII) online
information business including the Dialog and
DataStar brands and its technology assets. The
acquisition was funded by a combination of
equity, senior debt and high yield notes.
Following the completion of needed
restructuring and cost reduction efforts
through 1998, the Company took its first step
in February 1999 in focusing on its three
principal areas of opportunity, splitting the
Group into three major divisions: ISD, which
contained the information products and
services; WSD containing technology patents and
resources, the InfoSort content indexing and
Muscat natural language search technologies,
and the
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WebTop/WebCheck and K-Working solutions; and
ECD containing the OfficeShopper and Sparza
products and business-to-business eCommerce
technologies.
Through 1998 and 1999, we focused limited
investment resources on our WSD and ECD
businesses, enabling the launch of our
K-Working solutions (contracts signed with the
DTI and the BBC plus an important partnership
with Fujitsu of Japan), our WebTop.com search
engine, our Sparza eCommerce software solutions
and OfficeShopper business supplies eCommerce
service. Nevertheless, the advancement of
growth opportunities across all three divisions
remained constrained by the Company's capital
structure and lending covenants which
increasingly ran contrary to Dialog's growth
objectives in its three clearly defined
business areas.
b) Strategic review
To resolve these investment constraints and
better position the Company to pursue growth in
its businesses, the Group commenced a formal
strategic review in 1999 in conjunction with
its financial advisers. This thorough,
time-consuming and exhaustive process involved
months of management discussions with various
third parties and the examination of a broad
range of opportunities.
The Board has long held the view that both the
eCommerce and Web Solutions divisions have very
strong technology platforms capable of
delivering significant shareholder value, but
that this potential could not be fully realised
given the Group's capital constraints. The
Board's view was confirmed during the strategic
review period, which resulted in a number of
expressions of interest from third parties
concerning all or part of the Company's
activities, giving rise to the concept that the
divestiture of the ISD could cure the Group's
liquidity constraints while enabling the
retention of the divisions possessing the most
significant unrealised value and growth
potential. Furthermore, the Board firmly
believes that the divestiture of the ISD would
also create greater transparency for the value
and opportunity of the WSD and ECD.
As a result of the proposed transactions,
Bright Station will be made up of the existing
WSD, focused on leveraging its Muscat and
InfoSort technology assets to develop knowledge
management (K-Working) and Web search engine
(WebTop/WebCheck) businesses; the existing ECD,
focusing on the supply of eCommerce services
(OfficeShopper) and
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technologies (Sparza); and the new Internet
Ventures Division (IVD), which will act as an
incubator injecting a combination of the
Company's technologies, management expertise,
and capital into promising new Internet and
eCommerce start-ups.
c) ISD sale
Concluding the strategic review process, your
Board has determined that the sale of the ISD
and the consequent application of the proceeds
to retire all outstanding debt presents the
best way forward to providing appropriate
funding to the Company's technology-based
operations and restoring the opportunity to
deliver enhanced shareholder value.
Accordingly, the Company has agreed to dispose
of the ISD division, comprised of the Dialog,
DataStar, Profound and TradStat ranges of
products, to The Thomson Corporation for a
consideration of $275 million in cash.
Additionally, Bright Station will retain
content distribution rights under a royalty
arrangement.
In the year ended 31 December 1999, the ISD
generated profit before tax of (pound)19.3
million (1998: (pound)25.5 million) on turnover
of (pound)165.1 million (1998: (pound)165.3
million). As at 31 December 1999, the ISD had
net assets of (pound)39.4 million (1998:
(pound)42.1 million).
Under Thomson, ISD will benefit from greater
capital resources that can be devoted to the
business as well as from the synergies inherent
in Thomson's existing and substantial content
collection and global infrastructure. Thomson
will retain the structure and product lines
currently ascribed to ISD, and existing staff
and management will remain in place.
Consequently, both parties envisage that the
transfer of operations will be virtually
seamless for staff, customers and suppliers.
In addition, The Thomson Corporation will enter
into a strategic alliance with the new company
regarding licensing and distribution agreements
for Bright Station's technologies.
Specifically, Thomson will be using the search
and structure technologies under licence to
facilitate the provision of ISD solutions and
will also become a distributor for Bright
Station's K-Working products.
d) Debt Repayment
As part of the overall refinancing proposals,
the Group appointed Wasserstein Perella & Co
Inc. to advise and manage the process of
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retiring the Company's $180 million in high
yield Notes and $87 million Senior Credit
facility. As a consequence, the Company has
tendered for 100% of the Bonds at par, which
requires the consents of holders of 95% of the
issue.
e) Strategic Equity Stakes
As part of the refinancing proposals, Thomson
has agreed to subscribe for 9,297,290 new
ordinary shares at 170.5p per share. The
aggregate cash consideration of Thomson's
investment is (pound)15.9 ($25) million,
accounting for 4.9 % of the Group's equity on a
fully diluted basis. The Board firmly believes
that Thomson's investment and ongoing strategic
interest in Bright Station is a very strong
validation of its technology platforms and
prospects.
In addition, JIYU Holdings Limited - a company
with global interests in a variety of
industries including the technology sector, has
agreed to subscribe for 7,038,123 new ordinary
shares at 170.5p per share. The aggregate cash
consideration of JIYU Holding's investment is
(pound)12 ($19) million, accounting for 3.7 %
of the Group's equity on a fully diluted basis.
With subsidiary businesses active in the areas
of TV/PC convergence and satellite broadcast
technology, the Board believes that JIYU
represents an important strategic and financial
partner for Bright Station plc.
Group post ISD sale
After the sale of ISD, the Board believes that
Bright Station will be well placed to take
advantage of its growth opportunities with a
strong capital position and no debt
obligations. Additionally, management will be
able to concentrate its full energy on
developing, marketing and selling the WSD and
ECD products and services - such as the
WebTop.com search engine, WebCheck desktop
concept-based searching application, k-working
knowledge management software tools, Sparza
eCommerce software solutions, and the
OfficeShopper B2B eCommerce service.
The Board believes that search, structuring and
eCommerce technologies will be the fundamental
backbone of Internet and eCommerce businesses
in the 21st century.
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Management's Technology Credentials
The executive management team of Dialog has
consistently demonstrated its expertise in
successfully anticipating and developing
products and services and technical innovations
to lead into existing markets and develop new
markets. In its formative years, the Group
successfully developed and introduced InfoSort
as an innovative tool for intelligent filing
and searching of diverse databases. This
product has been further developed and improved
in subsequent applications that have been
instrumental in creating added value for
Dialog's customers whether it is through Web
Solutions such as the strategic alliance with
Fujitsu or the development of the recently
launched WebCheck desktop application.
In addition the management team were amongst
the first to recognise and anticipate the
impact of the Internet's potential to deliver
information to end users and the requirements
for browser based intuitive products that could
be utilised by business users and consumers
alike. The Company has also constructed new
technologies that are well positioned to take
advantage of the new digital economy. The
management of your Company has also been
successful in securing large contracts with,
for example, the DTI, BBC, Fujitsu, and
Freeserve.
a) Web Solutions Division - WSD
WSD is the "search and structure" technology
division. It owns the intellectual property
rights for the Company's proprietary
InfoSort(R) automatic indexing and Muscat(R)
probabilistic searching technologies. The focus
of the division is to leverage these technology
assets individually or together in the form of
various commercial applications such as its
WebTop.com Internet search engine, WebCheck
concept-based desktop search application, and
K-Working suite of knowledge management tools.
b) eCommerce Division - ECD
ECD is the eCommerce technology arm of the
Company. It owns the intellectual property
rights to its proprietary Sparza eCommerce
software. The focus of the division is to
leverage its eCommerce technology assets both
in providing business-to-business eCommerce
software solutions to businesses,
manufacturers, wholesalers and resellers, and
through eCommerce services such as
OfficeShopper - an award-winning Internet-based
supplier of business supplies. OfficeShopper
will continue to grow its user base through
both direct
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sales and through alliances with
consumer-focused partners such as Freeserve.
Once the business reaches sufficient maturity,
and when prevailing market conditions are
suitable, it is our intention to pursue the
public floatation of this business in order to
directly fund its continued growth as well as
to better highlight its intrinsic value within
the financial markets.
c) Internet Ventures Division - IVD
IVD will seek to develop in-house and to assist
externally generated business opportunities in
the Internet and eCommerce areas. It will do
this with the application of the Company's
proprietary search, structuring and eCommerce
technologies, management expertise and
investment capital. The Board also has proposed
a strategic relationship with leading UK
Internet incubator Oxygen Holdings plc. Oxygen
Board Member Matthew Freud will join the panel
of Bright Station's IVD and Bright Station plc
Chief Executive Dan Wagner will be appointed to
the investment committee of Oxygen Holdings.
These mutually beneficial relationships are
expected to benefit Bright Station by providing
it access to an even greater pool of strategic
support as well as technology business and
investment opportunities.
Change of Name
A resolution proposing the change of the
Company's name to Bright Station plc will be
tabled for consideration at the Extraordinary
General Meeting (EGM).
Current Trading and Prospects
Preliminary Results to 31st December 1999
Full-Year Financial Summary
1999 Group revenues rose 2% to (pound)174
($281.2) million, compared to 1998 levels;
The increase was driven by revenues
from Dialog's strategic partnership
with leading technology conglomerate
Fujitsu, which favourably benefited
the Company's Web Solutions Division
(WSD);
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Operating profit amounted to (pound)15.1
($24.3) million against (pound)20.7
($33.4) million for 1998, reflecting
provisions against investments (as
described below) and seasonally weak
trading in the Final Quarter ISD revenues
decreased marginally from (pound)165.3
($266.4) million in 1998 to (pound)165.1
($266.1) million in 1999 WSD revenues
increased 97.5% to (pound)7.9 ($12.7)
million in 1999, compared to 1998; and ECD
revenues reached (pound)1.4 ($2.3) million
in the divisions first full year of
trading
Operational Highlights
WebTop.com, a new concept-based search
engine, revolutionising the way in which
people can search the Internet, was
previewed by Dialog in December 1999 and
launched in March 2000; WebCheck, a
concept-based searching tool featuring
"drag and drop" technology for searching
an entire sentence, paragraph, document or
email, was recently introduced as a
complementary, desktop application of
WebTop; Dialog launched a new suite of
global knowledge management software
products under the "K-Working" brand name,
in the latter part of 1999; End-user
Internet portals, which accept credit card
payments for usage were introduced, in
conjunction with a corporate alliance with
Netscape Communications; Fujitsu unveiled
its first Japanese product incorporating
Dialog's proprietary InfoSort indexing
technology; Dialog raised its strategic
investment stake in natural language
searching tool company, Muscat Ltd., from
70% to 100%; and, The world's first
Web-based trade statistics resource -
TradStat Web (www.tradstatweb.com) - was
launched by Dialog in November.
During much of the fourth quarter, management
and the Board focused their collective efforts
on resolving the Company's debt situation,
which has culminated in today's announcement of
the proposed sale of the Information Services
Division (ISD) to The Thomson Corporation. As
discussed, this sale will allow the Company to
pay off its outstanding debt in full, and
importantly, invest needed capital in its
other, fast-growing divisions as well as a new
third division focused on
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investment in and the nurturing of, promising
Internet and high-tech business start-ups.
Several non-recurring items impacted the
Group's 1999 results, including provisions
against investments of (pound)4.6 ($7.4)
million relating to investments in 4th Network
(now renamed eHotel) and Frost and Sullivan.
Additionally, the Group recorded an approximate
(pound)1.6 ($2.6) million increase in
Amortisation of Development Costs, compared to
1998. Renegotiations of Dialog's Senior Bank
Facility in November 1999 also added (pound)0.5
($0.8) million one-time costs related to legal
and advisory fees.
Assuming shareholder and bondholder approval of
the proposed sale of ISD to Thomson, the Group
expects to report a one-off loss relating to
the transaction in the first half of 2000. In
the absence of the proposed sale, the Group
faces issues with regard to working capital and
near term debt servicing payments which it
would find extremely challenging to address
from any alternative sources of funds.
Since the year end, Dialog's eCommerce division
(ECD) entered into an exclusive alliance with
leading UK Internet service provider Freeserve
plc (NASDAQ:FREE; LSE:FRE), to provide a
co-branded version of Dialog's OfficeShopper
via the business channel of Freeserve's
Internet portal, at http://www.freeserve.net.
Board
The impact of the proposal will be to
significantly alter the Group's operational
structure and in particular dramatically reduce
the current head count, as employees of ISD
will be transferred to Thomson. Accordingly, it
is intended that the executive Board will be
comprised of Dan Wagner and David Mattey.
Patrick Sommers, Ciaran Morton, Jason Molle and
Stephen Maller will be moving with the ISD
division to The Thomson Corporation and will
therefore resign their executive
responsibilities. However, Patrick Sommers will
remain a non-executive director of Bright
Station.
Extraordinary General Meeting (EGM)
An EGM of the Company will be held at which
resolutions will be proposed to approve the
Sale. A Circular outlining these proposals
together with a notice of the EGM will be sent
to shareholders in due
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course. It is a condition of the Sale that a
majority of Shareholders vote to approve the
transaction.
Summary
In summary, your Directors believe that the
Proposals address the two key objectives
identified in the strategic review of
eliminating the debt burden, whilst
repositioning the Group on two core divisions,
which have exhibited significant growth and
will now have secure cash resources to support
their future development.
After completion of the Sale, the Company will
be well placed to take advantage of its growth
opportunities without the challenges inherent
in servicing a large debt position. Management
will be able to concentrate their full energies
on developing the WSD and ECD products and will
be in possession of the funds to aid that
expansion.
Allen Thomas
Chairman
For Further Information please contact:
The Dialog Corporation plc
Dan Wagner, Chief Executive
0171 930 6900
dan_wagner@dialog.com
David Mattey, Finance Director
0171 930 6900
david_mattey@dialog.com
Investor Relations
The Hogarth Partnership (UK)
John Olsen
0171 357 9477
jolsen@hogarthpr.co.uk
Jaffoni and Collins (US)
David Collin
(212) 835 8500
dial@jcir.com
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