|Basis100 to Acquire 100% of Mortgage Risk Assessment Corporation (MRAC)|
Basis100 accelerates its U.S. strategy and increases revenue and EBITDA guidance for FY2002
Toronto, ON, May 24, 2002 - Basis100 Inc. (TSE:BAS), a technology solutions provider for the financial services industry, today announced that it has agreed to acquire 100 percent of the shares of U.S.-based Mortgage Risk Assessment Corporation (MRAC), subject only to regulatory approval. While Basis100 is the leading provider of automated property valuations (AVM) to the U.S. mortgage lending market, with over 1,700 customers, MRAC has the industry-standard, index-based AVM for the securitization segment of that market with over 300 customers. With this acquisition, Basis100 now has an estimated 50 percent marketshare, with direct involvement from the mortgage point-of-sale to the investment community. The transaction is expected to close on May 31, 2002.
“This acquisition clearly drives increased shareholder value. The AVM market alone is projected to be about $50 million US by the end of this year, growing at 35 - 50 percent annually. We expect to build on our combined share of the AVM market to drive exponential growth, both in revenue and earnings,” said Gary Bartholomew, Chairman and CEO, Basis100. “Additionally, with the combined customer base, Basis100 has relationships at all points of the mortgage process from the point-of-sale to the capital markets. Our next step is to leverage this customer base and integrate BasisXpress™, our mortgage processing solution and BasisXchange™, our trading system, to create an end-to-end mortgage solution.”
MRAC manages a nation-wide database of residential property characteristics, related financial sales and lending transactions and contains information for over 54 million properties in 1,300 counties in 46 states. The database is used to generate products that provide risk assessment information used to create, manage and trade pools of mortgage-backed securities, marketing lists for lead generation and collateral risk analysis associated with mortgage securitization. Among MRAC’s customers are Bear Stearns, Lehman Brothers and Goldman Sachs.
“Combining the complementary technologies of MRAC’s leading index model with our leading property-specific model allows us to enter new markets and deliver increased services to our customers. This will move us towards our goal of being a leader in every property valuation market segment, including origination, securitization, default, portfolio analysis, new business sourcing and servicing,” said Joseph J. Murin, President and COO, Basis100. “We anticipate a smooth integration process and expect to realize substantial economies of scale from this acquisition.”
“We are very enthusiastic about the prospects this acquisition will bring to both MRAC and Basis100. The combination of these two models will be extremely powerful,” said Chuck Ramsey, Chairman and CEO, MRAC. “This will be the first generation of the ‘super’ AVM and our clients will benefit from better results in both hit rate and accuracy.”
Basis100 agreed to acquire all the outstanding shares of MRAC for a purchase price of $7.5 million US in a combination of cash and Basis100 stock. MRAC shareholders could earn up to an additional $6 million US in cash and $1.5 million US in shares over the two years following the completed acquisition, based on meeting aggressive forward revenue and EBITDA performance targets.
Once completed, we expect the acquisition of MRAC to contribute about $5 million in incremental revenue in the remaining seven months of 2002 (representing annualized sales of $9.0 million) and about $1.5 million in incremental EBITDA (reflecting annualized EBITDA of approx. $2.75 million). Therefore, this would increase our guidance for the 2002 fiscal year to total revenues of $75 million from $70 million, with EBITDA increasing from 10-12 percent to 11-13 percent of total revenue. MRAC’s 2001 calendar year revenue and EBITDA were $6 million and $1.2 million respectively.
A conference call will be held on Tuesday, May 28, 2002 at 4:00 p.m. EST to discuss the MRAC acquisition further. Details will follow in a separate release.
Mortgage Risk Assessment Corporation (MRAC) is a research and consulting firm that tracks information on residential property values. MRAC provides portfolio evaluation, market planning, collateral property valuation and credit risk services to financial institutions, broker dealers, and the mortgage banking industry. For more information about MRAC, visit www.mortgagerisk.com.
Basis100 Inc. is a global technology solutions provider, which enables businesses to build, distribute, buy and sell products and services in more efficient and innovative ways. Basis100’s lines of business include: Lending Solutions for consumer credit, mortgage origination and processing; Data Warehousing and Analytic Solutions for automated property valuations, property data-warehousing, data products and analytics support; and Capital Markets Solutions for cash and derivatives trading, and settlement and clearing. Our solutions are installed on 5 continents and in 36 countries around the world.
For more information about valuation technology, please visit www.Valuations.Basis100.com or for information about the corporation, please visit www.Basis100.com.
Forward-looking (safe harbour) statement
Statements made in this news release that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes", "plans", "expects" or "intends" and other statements which are not historical facts contained in this release are forward-looking, and these statements involve risks and uncertainties and are based on current expectations. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.