Online Resources to Acquire Princeton eCOM

Coupled with Online Resources’ bill payments business, the combined company expects to process over 200 million transactions representing $75 billion in bill payments over the next year. The combined company will serve 2200 financial institutions and 1600 billers, more clients than any other bill payment processor. Based on its first quarter 2006 revenue results, which is up over 25 percent from the prior year, Princeton eCom has an annual run-rate of approximately $39 million in revenue. Margin on earnings before interest, taxes, depreciation and amortization (Ebitda) was 12 percent. Online Resources expects that the acquisition of Princeton eCom will become accretive to core earnings per share, a non-GAAP measure, at the end of 12 months and neutral to slightly accretive to full year 2007 core earnings per share. Online Resources will provide revised 2006 guidance that includes the acquisition of Princeton eCom after the closing of the transaction, which is expected by July 15, 2006. The purchase price will be funded from cash on hand and financing provided by Tennenbaum Capital Partners, LLC. At closing of the transaction, Tennenbaum will make a total investment of $160 million in Online Resources consisting of $75 million in preferred stock convertible to common at a 25 percent premium to market and $85 million in senior secured notes. On an “as converted” basis, Tennenbaum will hold the equivalent of 4.6 million shares of common stock, or approximately 14 percent of shares on a fully-diluted basis. The Company will appoint a Tennenbaum partner to join its Board of Directors. Lehman Brothers Inc. advised Online Resources on the transaction and acted as exclusive placement agent on the financing. Lane, Berry & Co. advised Princeton eCom.