End of Empired's HR play

Perth-based software and IT infrastructure services group, Empired Ltd, is planning a significant restructuring of the business to spin-off its BigRedSky human resources division.

The move, which goes to a shareholder vote later this month, is a precursor to a proposed $3 million capital raising for Empired, which would look to list on the Australian Securities Exchange by the end of September, if all goes to plan.

Shareholders in the company, which is being advised by Grange Consulting, will receive a pro-rata holding in BRS Ltd, another unlisted public company which will own the BigRedSky business. It will then embark on its own fund raising, initially seeking about $600,000 to further commercialise its products.

ASIC records show that shareholders include GRD Ltd, an interest associated with South Africa’s AST Group Ltd.

Empired managing director Russell Baskerville will be granted 1.1 million options as part of the restructuring process.

About 22 per cent of Empired, which is chaired by business mentor and former insolvency practitioner Mel Ashton, would be sold through an IPO process ahead of a listing.

While Mr Baskerville could not discuss the IPO for legal reasons, he said the business had developed into two vastly different streams – the more mature IT services business of Empired, and the relatively new talent management operations of BigRedSky.

He said the latter had about 60 customers and was positioned to grow to 300 or 400.

“BigRedSky has had about 300 per cent customer growth in the past 12 months,” Mr Baskerville said.

He said there could also be opportunities to participate in the consolidation of the market through future acquisitions.

According to documents obtained by searching ASIC records, the BigRedSky business unit has incurred operating losses of more than $500,000 for the 10-month period ending in April, and is currently has a cash burn rate of about $50,000 per month.

Empired plans to receive a monthly $30,000 fee for managing BRS in the first instance.

Empired’s business includes installing and maintaining IT infrastructure, such as servers and desktop networks.

Empired’s accounts, show the existing business has net assets of about $2.6 million, about $680,000 of which represents BigRedSky.

The BigRedSky product is a web-based talent management system aimed at assisting organisations to hire and retain staff at a lower cost.

Apart from Mr Baskerville, both Mr Ashton and another Empired director, former BankWest executive David Taylor, will receive options in the restructuring process.

Empired, formed in 1999 by Gavin Burnett and Justin Miller, enjoyed buoyant times and rapid growth during the early 2000s, fuelled by its acquisition of software service provider Tusk Technologies. Mr Baskerville joined the group with Tusk.

In 2004, Empired won top billing in the WA Business News Rising Star awards, just after its success with a deal to manage online recruitment for the WA government, including advertising, which was anticipated to divert recruitment classifieds from the major newspapers.

The Empired founders have since gone their separate ways, both selling out of the company and pursuing new directions.

Mr Burnett heads up IT development at WA Newspapers Holdings Ltd, while Mr Miller heads hearing technology company Sensear Pty Ltd.