Agreement offers strong growth opportunities for Points and the AAdvantage Program
Toronto, September 5, 2003 – Points International Ltd. (TSXV: PTS), operator of pointsxchange®, the only independent loyalty program currency exchange – at www.points.com, today announced a comprehensive agreement with American Airlines, Inc. (a wholly-owned subsidiary of AMR Corp (NYSE: AMR)), that significantly enhances and extends their commercial relationship.
“This agreement is a major achievement for Points, and a strong vote of confidence from one of the world’s largest and most powerful loyalty programs,” said Rob MacLean, CEO of Points. “The multi-year commitment offers exciting growth opportunities and a sustainable development program.”
The agreement builds upon an existing relationship through which Points has developed a growing suite of solutions to enhance the AAdvantage program (a founding pointsxchange® participant) and extends a number of existing short-term agreements through December 31, 2007, including those for pointsxchange®, pointspurchase™ and pointstransfer™. The agreement provides a stronger and more stable ongoing revenue base for both companies, based on firm, extended and deeper commitments.
In addition, Points and American Airlines will jointly commit to co-market loyalty offerings to millions of AAdvantage members over the next five years. “We are particularly excited about new opportunities to promote pointsxchange® within the AAdvantage program’s 45 million member base – the most valuable and dynamic target market for our business,” MacLean said.
“Points has played a key role in allowing us to effectively deliver new, dynamic products to meet the needs of our customers,” said Ed French, President, AAdvantage Marketing Programs. “American Airlines is pleased to strengthen its commitment to doing business with Points, and we look forward to working closely with the Points team over the coming years to add further value for AAdvantage members.”
Also under the agreement, Points will acquire from American Airlines its rights in warrants, issued to American Airlines in 2001 by Points` subsidiary Points.com Inc., to acquire up to 4,827,255 common shares of Points.com Inc.
In consideration of the value of this agreement to Points, American Airlines will be issued 2,196,635 common shares of Points. American Airlines has undertaken that it will not transfer 1,921,500 of the common shares; provided, however, that common shares will be released from this undertaking in approximately equal quarterly installments over a 21 month period, commencing three months from today.
The effectiveness of this transaction, including the agreement described above and the issuance of the common shares to American Airlines, is subject to receipt of all applicable regulatory approvals. In the event that all applicable regulatory approvals are not obtained within 30 days, American Airlines or Points may elect to terminate the transaction. This transaction was negotiated at arm`s length and no finders fee is payable in connection with the transaction. In addition to the undertaking respecting transfer described above, the common shares of Points issuable in the transaction will be subject to a statutory four month hold period commencing on the date of issue of the common shares.
Upon the issuance of the 2,196,635 common shares to American Airlines (and after giving effect to adjustments for changes in the capitalization of Points from April 11, 2003) the outstanding Series Two Preferred Share of Points will be convertible, for no additional consideration and subject to anti-dilution adjustment, into 19,224,910 common shares and the outstanding warrant issued on April 11, 2003 by Points to Points Investments, Inc. will be exercisable to acquire, subject to anti-dilution adjustment, up to 72,872,142 common shares. The exercise of the warrant would result in a further investment in Points of up to approximately $74.0 million prior to April 11, 2004, $82.2 million from April 11, 2004 to April 10, 2005 and $92.5 million from April 11, 2005 to April 10, 2006. In the aggregate, the Series Two Preferred Share and the warrant will continue to be convertible and exercisable to acquire up to only 55% of the common shares of Points on an adjusted fully-diluted basis.
More about Points International Ltd. and www.points.com
Points operates the only independent loyalty points exchange – at www.points.com – allowing consumers to exchange points and miles from one participating loyalty program to another to achieve the rewards they want faster than ever before.
Pointsxchange® has to date attracted close to 40 partners, including industry leaders eBay (Anything Points), American Airlines (the AAdvantage program), InterContinental Hotels (Priority Club® Rewards), Air Canada (Aeroplan), Delta Air Lines (Sky Miles), Imperial Oil (Esso Extra), GiftCertificates.com, Fairmont Hotels & Resorts, Cathay Pacific Airways (Asia Miles), America West Airlines (FlightFund), Alaska Airlines (Mileage Plan), Sprint, JCPenney and many more.
Through a portfolio of custom marketing and technology solutions, Points is building rewarding partnerships with the world’s leading loyalty players. Additional Points Solutions include the innovative pointspurchase™ and pointsgift solutions, which power the online sale of miles and points to members of leading loyalty programs.
Points shares trade on the TSX Venture exchange under the symbol PTS.
About American Airlines
American Airlines is the world`s largest carrier. American, American Eagle and the AmericanConnection regional carriers serve nearly 275 cities in 50 countries and territories with approximately 4,300 daily flights. The combined network fleet numbers more than 1,000 aircraft. American`s award- winning Web site, AA.com, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld Alliance.
About the AAdvantage Travel Awards Program
The American Airlines AAdvantage Travel Awards program -- the first and largest of its kind -- began in 1981 with 283,000 members and has grown to more than 45 million members worldwide. The AAdvantage program has more U.S. fliers than any other frequent traveler program, and it provides more opportunities to redeem miles than any other program. In addition to travel, members can earn miles for everything from breakfast cereal to flowers, financial services, credit card purchases and more. For additional information visit www.aa.com/aadvantage.
For more information, please contact:
Moira Wright
Points International Ltd.
416-596-3257
moira.wright@points.com
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