WA's Cash Converters International Ltd has reduced its purchase price for lender Safrock Group by $3.4 million after due diligence.
WA's Cash Converters International Ltd has reduced its purchase price for Safrock Group, a lender which operates out of the bidder's stores, by $3.4 million after due diligence.
CCI cut the price from $17.5 million to $14.1m after adjustments were made to the company's previous estimate of net after tax earnings.
However, share vendors will be able to earn an additional $3.4 million by way of a performance bonus, which provides that Safrock must achieve certain performance targets over the two years and nine months after completion of the acquisition. Should it be successful, then further shares will be progressively issued at 40 cents per share up to a maximum value of $3.4 million.
CCI's acquisition of software and back office support provider Mon-e will go ahead as planned.
In an announcement the company indicated that the acquisition of the two companies, both of which are mainly employed to work in CCI stores, will transform the Company to a new level.
The announcement is pasted below
The Company is pleased to announce that following completion of due diligence enquiries, the acquisition contracts for Mon-E Pty Ltd and the Safrock Group of companies have now been executed.
The Safrock acquisition arrangements have been amended so that the purchase price has been reduced from $17.5 million to $14.1 million, but with the vendors having the opportunity to earn an additional $3.4 million by way of a performance bonus.
This reduction in the acquisition price is reflective of adjustments made to the previous estimate of Net After Tax Earnings which were identified during the due diligence process.
The performance bonus provides that if the Safrock Group achieve certain performance targets over the two years and nine months after completion of the acquisition, then further shares will be progressively issued at 40 cents per share up to a maximum value of $3.4 million.
No changes have been made to the acquisition arrangements for Mon-E Pty Ltd.
The Company will now seek shareholder approval for these transactions and a notice calling for a General Meeting will be dispatched by the end of this month.
The completion of these acquisitions and the associated capital raising will transform the Company to a new level of performance and strength.
We expect good growth across each of the businesses in 2007.
