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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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netGuru, Inc.
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(Name of Registrant as Specified In Its Charter)
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Bruce Nelson Dan Matsui/Gene Heller
Chief Financial Officer Silverman Heller Associates
(714) 974-2500 x-5215 (310) 208-2550
NETGURU INC. SIGNS DEFINITIVE AGREEMENTS TO MERGE
WITH BPO MANAGEMENT SERVICES AND DIVEST INDIAN OPERATIONS
Pending Vote by netGuru Stockholders at Annual Meeting
Yorba Linda, Calif.--August 30, 2006--netGuru, Inc. (Company) (Nasdaq: NGRU)
entered into definitive agreements to merge with privately held BPO Management
Services, Inc. (BPOMS)--a provider of business process outsourcing services,
including human resources, information technology, document management, and
finance and accounting functions to middle-market companies--and divest its
Indian engineering business process outsourcing operations and related assets.
The proposed merger would result in BPOMS becoming a wholly-owned subsidiary of
netGuru, with BPOMS' stockholders exchanging their shares of BPOMS common stock
and preferred stock for shares of netGuru common stock and preferred stock, and
netGuru assuming the obligations under BPOMS' outstanding options and warrants.
It is anticipated that BPOMS stockholders would then hold approximately 90% of
netGuru's equity interests that would be outstanding immediately following the
consummation of the merger, excluding most new equity or equity-based
securities, if any, issued by netGuru or BPOMS after August 29, 2006. The
divestiture of the Indian operations would occur simultaneously with the merger
and involve the transfer of netGuru's Indian subsidiary and certain additional
assets and liabilities to an entity owned and controlled by affiliates of
netGuru, Inc.
In connection with the merger and divestiture, netGuru would declare a cash
dividend and conduct a reverse stock split. If declared, the cash dividend would
be approximately $3.5 million, or approximately 18 cents per share of netGuru
common stock outstanding prior to the planned reverse stock split, and would
become payable out of $1.5 million in cash expected to be provided by BPOMS in
the merger and $2.0 million in cash expected to be received by netGuru from the
divestiture.
After the declaration of the dividend but prior to the payment of the dividend
and consummation of the merger, netGuru would effect a 1-for-30 reverse stock
split of its approximately 19.2 million outstanding common shares. In addition,
netGuru would create three series of preferred stock containing, among other
terms, various conversion, liquidation, redemption, voting, director election,
and board observation provisions. Shares of BPOMS preferred stock would convert
into shares of the newly created netGuru preferred stock at the closing of the
proposed merger.
If all closing conditions are met, the merger and divestiture are anticipated to
be completed by December 22, 2006. After the merger and divestiture are
completed, the Company's remaining operations--Web4 enterprise content
management software and netGuru Systems--would be integrated into BPOMS'
existing operations. BPOMS' management team would assume the Company's executive
and other management positions, although it is anticipated that netGuru's chief
financial officer, Bruce Nelson, and chief operating officer, Koushik Dutta,
will retain their current positions. In addition, directors selected by BPOMS
would assume most or all positions on the Company's board of directors,
including chairman. The Company would also change its name to BPO Management
Services, Inc., to reflect its new primary business of providing business
process outsourcing and IT services, and apply for a new trading symbol.
Patrick Dolan, BPOMS' chief executive officer, commented: "We believe our merger
with netGuru would provide not only access to the capital markets to support
future growth but also key software and technology to complement and strengthen
our existing operations. Demand for back-office business process outsourcing
services, especially from the under-served middle market, is rising, and with
economic and business growth continuing, we feel this merger represents a timely
and strategic move."
About the proxy statement and annual stockholders meeting to vote on proposed
merger:
In connection with the proposed transactions, a proxy statement will be mailed
to netGuru, Inc. stockholders to provide additional information, including the
date, time, and location of the annual stockholders meeting. netGuru will also
file the proxy statement with the U.S. Securities and Exchange Commission (SEC).
Stockholders are advised to read the proxy statement, which will contain
important information about the proposed transaction. A copy of the proxy
statement-when available-and other documents filed by netGuru with the SEC may
be found free of charge at the SEC's web site at www.sec.gov. Copies of the
proxy statement-when available-and other documents filed by netGuru with the SEC
may also be obtained free of charge from netGuru by directing a request to:
netGuru, Inc.; Attention: Bruce Nelson; Chief Financial Officer; (714) 974-2500,
extension 5215. netGuru and its executive officers and directors may be deemed
participants in the solicitation of proxies from the stockholders of netGuru in
favor of the merger with BPOMS, the divestiture, the reverse stock split, the
name change and other corporate matters. Additional information regarding the
interests of netGuru's executive officers and directors in the proposed
transactions may be found in the proxy statement and the Company's other SEC
filings.
About BPO Management Services, Inc.
BPO Management Services (BPOMS) offers strategic new business products and
services for the business process outsourcing (BPO) market. BPOMS is both a BPO
direct service provider and expert BPO project manager. BPOMS supports
middle-market businesses new to the BPO market, established businesses that
already outsource, and businesses seeking to maximize return-on-investment in
their in-house workforce. For more information, please visit www.bpoms.com.
About netGuru, Inc.
netGuru is an engineering services company offering engineering business process
outsourcing services for the architecture, engineering, and construction (A/E/C)
industry; document/project collaboration software/solutions for A/E/C companies,
enterprise software providers, software integrators, and other businesses
engaged in document/project-centric operations; and technical services and
support. netGuru offices are located in the United States, Europe, and India.
For more information, please visit www.netguru.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:
With the exception of historical or factual information, the matters discussed
in this press release, including without limitation, the proposed terms and
timing of the merger and divestiture, the proposed terms and timing of the
declaration and payment of a cash dividend, the proposed terms and timing of the
reverse stock split and other share-related transactions, the proposed
integration and primary business of the post-merger company, management changes,
and other corporate and transactional matters are forward-looking statements
that involve risks and uncertainties. Actual future results may differ. Factors
that could cause or contribute to such differences in results include, but are
not limited to, the need for stockholder and other approvals, the continued
willingness and ability of the parties to consummate the merger, divestiture and
related transactions, changes in market and business conditions, the Company's
ability to remain listed on Nasdaq or to re-list on Nasdaq in conjunction with
the proposed transaction, the parties' future issuances of equity or
equity-based securities, and other risks and factors detailed from time to time
in the Company's public statements and its periodic reports and other filings
with the U.S. Securities and Exchange Commission.
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