IBEX Limited Announces $70 Million Repurchase from The Resource Group International, Exiting Controlled Company Status

Rhea-AI Summary

IBEX announced a $70 million repurchase of 3,562,341 common shares (20% of diluted shares) from The Resource Group International (TRGI) at $19.65 per share. The transaction includes $45 million in cash and $25 million in seller financing, resulting in a proforma net debt of $9 million. Following this, TRGI will retain 1.8 million shares, and IBEX will no longer be a 'controlled company' under Nasdaq rules. The board will have a majority of independent directors, with one TRGI-employed director resigning by year-end. IBEX has the right to repurchase TRGI's remaining shares within 4 years under certain conditions.

Positive

• Exit from controlled company status enhances corporate governance independence
• Company maintains strong balance sheet with only $9M net debt post-transaction
• Right to repurchase remaining TRGI shares within 4 years provides strategic flexibility

Negative

• Increase in net debt position from cash portion of share repurchase
• Suspension of existing share repurchase program

Insights

Financial Analyst

This $70M share repurchase from TRGI marks a significant strategic shift for IBEX. The transaction price of $19.65 per share aligns with recent market values, while the financing structure ($45M cash, $25M seller financing) maintains reasonable leverage with only $9M proforma net debt.

The deal's most significant impact is IBEX's transition from a controlled company status, potentially improving corporate governance and investor appeal. The 20% reduction in TRGI's stake, plus the option to buy their remaining shares, signals a clear path to independence. The board restructuring to majority independent directors should enhance corporate governance practices.

The transaction's careful structuring, including independent committee oversight and fairness opinion, demonstrates strong corporate governance. While the pause in the existing buyback program may temporarily impact share price support, the improved governance structure and reduced ownership concentration could attract institutional investors and potentially lead to better price discovery.

WASHINGTON, Nov. 19, 2024 (GLOBE NEWSWIRE) -- IBEX Limited (“ibex”, or “the Company”) (Nasdaq: IBEX), a leading global provider of business process outsourcing (BPO) and AI-powered customer engagement technology solutions, today announced that it repurchased an aggregate of 3,562,341 of the Company’s common shares beneficially owned by The Resource Group International, Limited (“TRGI”), which represents approximately 20% of the diluted shares outstanding. These shares were unregistered and were not part of the public float. The purchase price was $19.65 per share, which was the last closing price, as well as the five-day volume weighted average trading price, for ibex common shares on the Nasdaq Global Market. The total transaction consideration is $70 million consisting of $45 million in cash and $25 million in seller financing. Subsequent to this transaction, Ibex will have a proforma net debt position of approximately $9 million based on Ibex’s most recently released balance sheet dated September 30, 2024.

Following the repurchase, TRGI will retain ownership of 1.8 million common shares of the Company, and ibex will no longer be a “controlled company” within the meaning of the Nasdaq Stock Market Rules. In addition, a majority of the Company’s eight person board will consist of independent directors after the repurchase. Five current directors appointed by TRGI shall continue to serve until the 2025 Annual General Meeting of Shareholders, and one of the two current ibex directors employed by TRGI will resign from the Company’s Board of Directors before the end of the year. Additionally, as part of the share repurchase, ibex will have the right to repurchase the remaining shares owned by TRGI within 4 years, if certain conditions are met.

“We are very pleased to announce this agreement with TRGI, which comes in addition to the more than $27 million in share repurchases we have made since September last year, reflecting the continued confidence in our business and growth trajectory,” said Bob Dechant, ibex CEO. “We believe that share repurchases are a prudent use of capital as we continue to generate free cash flow and maintain a strong balance sheet. Additionally, this transaction helps to further decrease our shareholder concentration and we will no longer be defined as a controlled company, as we will transition in full to NASDAQ’s corporate governance requirements to have independent board and committee composition. We believe this will give ibex the potential to broaden our shareholder base. TRGI has been a key partner to ibex for nearly 20 years for which we are deeply appreciative and will remain a meaningful investor as we move forward.”

Mohammed Khaishgi, TRGI CEO and Non-Executive Chairman of the Board of ibex, said, “Over the last two decades, we have been staunch believers in the vision and execution of ibex as it has grown its revenues nearly ten-fold over that period. In particular, we have been big supporters of the strategy that Bob and the ibex team have executed on for over a decade. We believe that now is the right time for ibex to pivot to the next stage of its evolution and move beyond the structure of a controlled company. We of course remain fervent in our support of the company’s future and look forward to continuing as non-controlling shareholders of ibex.”

The transaction was unanimously approved by a Special Transaction Committee comprised of members who were independent from TRGI. The Special Transaction Committee was advised by independent legal and financial advisors, and a fairness opinion was furnished by those financial advisors supporting the transaction. The entire Board, except for members employed by TRGI, who recused themselves from the vote, also ratified the transaction.

Lincoln International, LLC acted as financial advisor and Gibson, Dunn & Crutcher, LLC served as independent legal counsel to the Special Transaction Committee.

With the consummation of this transaction, ibex will pause its existing share repurchase program. Any decision in relation to a resumption of the existing or any future buyback program will be based on an ongoing assessment of the capital needs of the business and general market conditions.

About ibex
ibex delivers innovative business process outsourcing (BPO), smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions to help companies acquire, engage and retain valuable customers. Today, ibex operates a global CX delivery center model consisting of 31+ operations facilities around the world, while deploying next generation technology to drive superior customer experiences for many of the world’s leading companies across retail, e-commerce, healthcare, fintech, utilities and logistics.

ibex leverages its diverse global team of over 31,000 employees together with industry-leading technology, including the AI-powered ibex Wave iX solutions suite, to manage nearly 200 million critical customer interactions, adding over $2.2B in lifetime customer revenue each year and driving a truly differentiated customer experience. To learn more, visit our website at ibex.co and connect with us on LinkedIn.

Investor Contact
Michael Darwal
ibex
Michael.Darwal@ibex.co

Media Contact
Dan Burris
ibex
Daniel.Burris@ibex.co

FAQ

How much did IBEX pay for the share repurchase from TRGI?

IBEX paid $70 million total, comprising $45 million in cash and $25 million in seller financing, at $19.65 per share.

How many shares did IBEX repurchase from TRGI?

IBEX repurchased 3,562,341 common shares, representing approximately 20% of diluted shares outstanding.

What is IBEX's net debt position after the TRGI share repurchase?

IBEX will have a proforma net debt position of approximately $9 million based on the September 30, 2024 balance sheet.

How many IBEX shares will TRGI retain after the repurchase?

TRGI will retain ownership of 1.8 million common shares of IBEX after the repurchase.