Telecommunications services provider Spirit Telecom has inked an agreement to acquire Internet provider World Without Wires in a deal valued at $4.6 million.
The acquisition is scheduled to be finalised in the next 10 days subject to customary conditions being met.
Wires markets superfast internet to business and residential customers throughout South East Queensland and Northern NSW. Its network covers over 12,000 square kilometres and the company says it supplies more than 2,200 customers, generating $2.6 million of revenue for the past financial year.
The ASX-listed Spirit (ASX:ST1) will fund the acquisition via a $6 million Bank of Melbourne debt facility (replacing the Bankwest debt) and a capital raise from institutional and sophisticated investors of $1.5 million.
{loadposition peter}Spirit reports that subscription agreements for a total of 12,500,000 ordinary shares at 12 cents each have been entered into, raising the $1.5 million which is a premium to the last close price of $0.10c.
The transaction brings four new institutional investors into Spirit’s shareholding. No shareholder approval is required and the balance of the acquisition will be funded via a placement of 10,595,783 at a 14-cent price to the vendors, which represents 32% of the purchase price.
Spirit managing director Geoff Neate said, “This is an exciting acquisition that has been over 12 months in the making and brings a growing business, managed by a smart team, into Spirit’s stable”.
“This will expand Spirit’s footprint significantly and generate a stronger platform of growth. Wires CEO, Dainen Keogh, will join the Spirit Executive team and will bring another level of thinking and expertise to our team.”
“We have been working with Spirit, in a supplier relationship for some time now and we are confident that our two teams will come together and work as a cohesive unit,” Keogh said.
“We have chosen to take 32% as scrip, given we understand the opportunity to be part of a larger organisation.”
The two companies said the Wires business is highly earnings accretive and will add significant value to Spirit via geographically expanding the Spirit network, significant opportunity for growth within the Wires network footprint, high growth, high margin business, ability to bundle services to existing customers and an established wholesale channel.