Home Capital Group Inc. has entered into a definitive agreement to pay $1.60 a share in cash for Payment Services Interactive Gateway Corp. (PSiGate).

The proposed transaction represents an enterprise value for PSiGate of approximately $18.4 million.

The offer represents a premium of approximately 49.5% over the Aug. 15, 2007 closing price of the PSiGate shares and a premium of approximately 36.7% to the 30-day volume weighted average price of the shares on the TSX Venture Exchange as of Aug. 15, 2007.

“The acquisition of PSiGate is an important step in the expansion of our Home Trust VISA card services division. PSiGate complements our existing product line by allowing us to offer payment services to internet merchants and adds a strong line-up of managerial and technical talent to our existing card services team,” stated Gerald Soloway, Home Capital’s president and CEO, in a release.

Anthony Palumbo, President and CEO of PSiGate, added, “With Home Capital’s backing, we believe that we are well positioned to meet the rapidly growing credit card processing needs of our customers across Canada and the U.S.”

Upon the recommendation of a special committee of the independent directors of PSiGate, the independent directors of the PSiGate board of directors unanimously agreed to enter into the support agreement with Home Capital and unanimously recommend that shareholders accept the offer.

Octagon Capital Corporation has acted as exclusive financial advisor to PSiGate and the special committee and has provided them with a fairness opinion that the consideration to be received by shareholders pursuant to the offer is fair from a financial point of view. In addition, the support agreement includes a non-solicitation covenant on the part of PSiGate and a right in favour of Home Capital to match any competing offer.

Palumbo and Robert Fenos, the chief operating officer of PSiGate, have irrevocably agreed to tender all of their Shares to the offer. Palumbo owns 2,817,318 shares and 314,000 options to purchase shares, and Fenos directly and indirectly owns 1,816,607 shares and 264,000 options to purchase shares, which in aggregate represent approximately 45.4% of the outstanding shares on a fully diluted basis.

The offer will be conditional upon acceptance by holders of not less than 66 2/3% of PSiGate’s shares as well as receipt of all necessary regulatory approvals and other customary conditions. Home Capital expects that a take-over bid circular containing the terms of the pffer will be mailed to shareholders, together with a PSiGate board of directors’ circular and other related documents, in the near future.

Home Capital operates through its principal subsidiary, Home Trust Company. Home Trust is a federally regulated trust company offering deposit, mortgage lending, retail credit and credit card issuing services.