THE management of WA-based technology services company Alphawest could put some lean years behind them with the proposed float of the company.
Aiming to raise up to $11 million through a backdoor listing using AIS Corporation as the vehicle, Alphawest’s recently launched prospectus reveals the company is planning to use all of the minimum subscription of $8.4 million to clear significant debt overhanging the group from former parent, Solution 6.
On top of the debt relief, Alphawest is banking on a recovery from the SARS-affected business in Singapore in order to lift revenue to $145 million, just above the 2001-02 level of $139.4 million.
Earnings before interest, tax, depreciation and amortisation have reflected these difficult times, hovering in the red for the past three financial years.
Net profit, though, jumped into the black last year because of a decision by Solution 6 to forgive debts of more than $13 million.
Solution 6 owned Alphawest until a 2002 management buy-out when the business was bought back by key management and staff.
At the time, Solution 6 provided $15.5 million in vendor finance after initially purchasing the company for $49 million.
“The intent is to pay down the debt as quickly as possible,” Alphawest CEO Garry Henley said.
The prospectus was lodged several months later than initially expected, while the company drummed up investor support for its plans and completed due diligence.
“When we started this, we were being fairly ambitious,” Mr Henley said.
He said the company was hoping to attract significant investor interest, citing the solid business across Australia and in Singapore.
“WA would still be our largest State by profitability,” Mr Henley said.
“Perth will continue to have modest growth because we are a fairly big player here. But our ongoing growth will be in Sydney, Melbourne and Brisbane.
“We have around 80 people in Sydney and we do around $50 million revenue annually [in Sydney] and the potential there is large.
“Perth will continue to be one of the most important parts of our business.”
He said Alphawest was currently completing major contracts for Elders, School of the Air and QBE.
“We have just finished a major deal with QBE in Sydney which automates their workers’ compensation process, which is a complex process involving the clients, doctors, involves lawyers, involves case management,” Mr Henley said.
“These are million-dollar deals that actually look at that process within in a enterprise.”
Subject to shareholder approval, AIS will change its name to Alphawest Limited. A new board will include Alphawest’s existing chairman Hugh Beggs, the company’s current CEO Garry Henley and its chief operating office Joe Browne.
