Electronic Clearing House Inc., a leading provider of electronic payment and transaction processing services, announced that it has mutually agreed with Intuit Inc. to terminate the merger agreement entered into by the companies on December 14, 2006.
In connection with the termination, ECHO and Intuit agreed to release each other from all claims arising under or related to the terminated merger agreement. ECHO also cancelled its previously adjourned special stockholders’ meeting relating to the proposed acquisition, which was scheduled to reconvene on March 27, 2007.
Additionally, ECHO today announced that it has been cooperating as a witness in a federal investigation relating to its Internet wallet customers that provided services to online gaming websites. Pursuant to a non-prosecution agreement expected to be executed shortly, the government will assure ECHO that it will not pursue any action against the company. ECHO has in turn agreed to disgorge $2.3 million, which represents management’s estimate of the company’s profits from processing and collection services provided to its Internet wallet customers since 2001, and to continue cooperating as a witness in that investigation. The company expects to incur additional legal expenses related to the federal investigation. Earlier this year, ECHO ceased all processing and collection services for its remaining Internet wallet customers.
“We are disappointed that we could not conclude the transaction with Intuit,” said Joel M. Barry, Chairman and Chief Executive Officer of ECHO. “We incurred a substantial amount of expenses in connection with the proposed transaction. These expenses, combined with the amount we agreed to disgorge to the government and additional expenses we expect to incur in connection with the federal investigation, will negatively impact our near-term financial results. That said, with cash and cash equivalents of $11.9 million and working capital of $13.3 million at December 31, 2006, we believe we have the resources we need. Additionally the fundamentals of our business are sound and our long-term opportunity remains solid.”
About Electronic Clearing House Inc.
ECHO (www.echo-inc.com) provides a complete solution for the payment processing needs of merchants, banks, technology companies and collection agencies. ECHO’s services include debit and credit card processing, check guarantee, check verification, check conversion, check re-presentment and check collection.