VENTURA, Calif.--(BUSINESS WIRE)--Aug. 29,
2000--Vsource, Inc. (OTCBB:VSRC - news), pioneer and a
leading provider of Web-enabled eProcurement solutions,
announced today that it has received a commitment from a unit of Mercantile Capital Group, LLC,
Northbrook, Ill., to invest in and lead a private placement of Vsource convertible preferred stock
projected to raise up to $11 million.
Approximately $1.4 million of the total has already been funded, primarily by Vsource shareholders
who had invested in earlier equity offerings. The remaining funding is expected to close on or before
September 15. Further financial details will be disclosed upon close of the financing.
Vsource will use the funds primarily to expand its operations, including capital equipment, technology
and staffing. In addition, the funds will support new product development to ensure continued
leadership in eProcurement technology. A portion of the funds will also be used to support marketing
efforts, primarily in cooperation with strategic partners Qwest and IBM.
Vsource plans to leverage its relationships with Qwest and IBM to extend its reach into vertical
industries and expand its industry expertise globally.
``A Mercantile affiliate participated in our February financing and we are pleased that they have
stepped in to lead this round. We chose Mercantile to lead this round of funding because of their
long-term strategic investment objectives and their desire to bring with them other co-investors with
similar objectives,'' said Robert ``Jay'' McShirley, chairman and chief executive officer of Vsource.
``Their decision to invest in the technology and company will enable us to take full advantage of the
Web-enabled eProcurement opportunities rapidly developing in the market.''
I. Steven Edelson, managing member of Mercantile Capital Group stated, ``Mercantile is very
pleased to be part of a long-term partnership with Vsource. We believe that VSN represents a new
generation of emerging Web-enablers to provide virtual platforms for collaborating, communicating,
purchasing and selling and is the future of eProcurement. We believe their exceptional pure-Internet
technology best positions Vsource to capitalize on what we feel can be explosive growth during the
next few years.''
About Mercantile Capital Group, LLC
Mercantile Capital Group is a private equity investment firm with offices in Chicago and New York.
It is an opportunistic fund that focuses on making investments with strategic partners. Mercantile
focuses on companies with strong fundamentals, which include achievable earnings models with
significant potential, proven management teams, strategic relationships and superior industry
reputations.
Specific areas of investment interest include telecommunications, data communications, wireless
technologies, bandwidth improvement software and hardware, semiconductor design and
production, Internet applications and services, e-commerce services and infrastructure, genomics
and medical devices. Mercantile also participates in management buyouts and platform industry
consolidations. Mercantile Capital Partners I, L.P., the unit leading the current financing, has applied
with the U.S. Small Business Administration to become a Small Business Investment Company
(``SBIC'') and is currently in the prelicensing stage. The principals of Mercantile also manage two
other private equity funds focused on early-stage investments around the globe.
About Vsource
Vsource, with headquarters in Ventura, provides the first transaction based, pure-Internet solution
for eProcurement. Its flagship product, Virtual Source Network (VSN), allows companies to create
an Internet-based procurement system to automate all aspects of corporate procurement, such as
material requisitions, RFP and RFQ, and direct order from supplier catalogs or contracts at
substantial savings. VSN accommodates electronic sending, receiving, approval and payment of
supplier invoices. VSN also supports a variety of private label and aggregated buying situations, such
as vertical markets, reverse auctions and virtual communities.
Unlike current software based eProcurement solutions from other suppliers, Vsource's pure-Internet
solution enables companies of any size to lower the cost of purchasing products and services by
eliminating the need to install expensive and complex client-side software. Current eProcurement
systems typically support only simple catalog-based procurement of indirect products and services.
Vsource supports the entire procurement process, for both indirect and direct products and services.
Vsource's pure-Internet approach provides companies of any size with a solution for eProcurement
that can be implemented significantly faster than current solutions, and with significantly lower risk
and cost. For further information, visit
http://www.vsource.net.