HIGH profile accountant Domenic Martino has emerged at the helm of a mystery buyer for Perth-based IT services company ComputerCORP Pty Ltd in a deal worth more than $8 million on paper.
HIGH profile accountant Domenic Martino has emerged at the helm of a mystery buyer for Perth-based IT services company ComputerCORP Pty Ltd in a deal worth more than $8 million on paper.
Mr Martino is to chair West Perth-based ComputerCORP in a plan to backdoor list through an ASX shell company Etick Ltd, which will change its name as part of deal which offers the the national IT player's vendors $4.9 million in cash, 14 million Etick shares issued at 25 cents each and 2 million options exercisable at 20 cents each.
The issue of 6 million management performance shares is also part of the deal.
A significant part of the shares component of the transaction will be escrowed until July 1, 2007.
ComputerCORP is majority owned by Hugh Smith with 60 per cent, with co-owners Rod Durston holding 30 per cent and Michael Rickers holding 10 per cent.
Perth lawyer Kevin Dundo and investment banker Paul Page, who is already a director of Elink, will join Mr Martino on the board, while the management team will compose of current ComputerCORP CFO Murray Mansell, Dee Broadmore, Peter Cappendell, Geoff Cox, Craig Singleton and Greg Carter.
Mr Martino was the high profile CEO of Deloitte Touche Tohmatsu between 2001 and 2003, but largely dropped from the limelight after the spectacular collapse of telco NewTel Ltd. He is a director of Energy Investments Ltd, and is a former chairman of Sydney Gas Ltd.
The heads of agreement between Etick and ComputerCORP is conditional on a number of matters, including Etick raising $6 million through the issue of 24 million shares for at least 25 cents.
Etick shares have been suspended but they last traded at 2 cents, giving the company a market capitalisation of $1.6 million.
The management performance shares will be provided in 1.5 million tranches based on net profitability, starting with a $2 million profit for 2006-07 and growing in $1 million increments to $5 million in 2009-10.
According to unaudited results provided with today's ASX announcement, ComputerCORP has generated revenue of $97.2 million for the 8 months ending February 28, resulting in earnings before interest, tax, depreciation and amortisation of $749,559.
In 2004-05, the company's EBITDA was $2 million on sales of $130.8 million compared to $1.7 million on sales of $97.3 million.
Below is today's full announcement:
ETICK LIMITED
ASX/MEDIA RELEASE
31 March 2006
ACQUISITION OF COMPUTERCORP PTY LTD
Etick Limited ("Etick" or "the Company") is pleased to announce that it has entered into a
heads of agreement to acquire ComputerCORP Pty Ltd ("ComputerCORP").
ComputerCORP, an Australian company, is a provider of IT infrastructure, services and
business solutions to major blue chip companies. The purpose of the acquisition is to
facilitate the management buy-in into ComputerCORP and to provide capital to fund the
development of new opportunities. ComputerCORP currently has a number of proposals
under review that, if accepted, will add to existing revenues.
To reflect the significance of the acquisition and the change to the nature and scale of
activities, it is proposed that Etick change its name to ComputerCORP Limited.
Significant Elements of the ComputerCORP Business
The ComputerCORP business commenced over 18 years ago in Western Australia.
Today there is an office in every State with a planned office opening in the Northern
Territory. Originally a facilitator of hardware and software technology between vendor
partner and customer, now ComputerCORP offers a comprehensive range of business
solutions, a selection of managed services around the desktop and infrastructure
lifecycle together with consultative and support type outsourcing contracts. At
completion, ComputerCORP will control two (2) wholly owned subsidiaries,
ComputerCORP Wholesalers Pty Ltd and ComputerCORP Finance Pty Ltd.
The ComputerCORP group and management completed two successful mergers and
acquisitions in the past 12 months in the ACT and Tasmania. Further acquisitions and
growth are planned for 06/07.
ComputerCORP presents the following business model:
PROCUREMENT
White box
Tier 1
Consumables
SERVICES
Configuration
Customer Services
Service Desk
Professional Services
Managed Services
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SOLUTIONS
Application development
Communications
Disaster Recovery
EB2B Solution
Finance
Mobile Technology
Output (print) Management
Security
Software
Storage
Sun/Unix
The development of national vertical sales within the business model is proceeding with
Software, Communications and Storage already in operation with Security and Mobility
to follow.
ComputerCORP has grown to become a leading national IT procurement and services
company with revenue for 05/06 projected to exceed $150m. ComputerCORP employs
approximately 280 staff Australia wide.
ComputerCORP has pioneered customer care in the IT market place helping to
maximize the value of IT. ComputerCORP services major government and corporate
business including:
7 The Australian Taxation Office
7 Customs
7 Qantas
7 Hatch
7 Chevron
Australia
7 Promina
Group
7 Woodside
7 Monadelphous
Engineering
7 Alinta
Gas
7 Asgard
7 Western
Power
7 Honda
Australia
Some of ComputerCORP's key features are:
7 National
presence
7 Proven IT service delivery
7 Significant
infrastructure
investment
7 Complete server, desktop and printer lifecycle management
7 Over 10,000 business users managed
7 Over 1,000 Network servers remotely supported
7 Over 97.8% of calls responded to within agreed Service Level Agreements
7 Capacity to commission over 200 technology devices a day
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7 Over 75% PC's and related products shipped with 99% next day delivery
7 Large holdings of inventory and spare parts
7 Experienced long serving personnel
7 Customer
focused
ComputerCORP is poised to take advantage of a number of opportunities in the IT
sector that will propel its growth. Both the IT outlook and trend to outsourcing and the
positive IT spend outlook will be opportunities not missed by the management at
ComputerCORP.
The Board and Executive Management of ComputerCORP
The board and executive management of ComputerCORP bring together a team
possessing a wealth of knowledge and experience in all facets of the business. Post
acquisition, the proposed new board of directors of Etick (to be renamed
ComputerCORP) will be as follows
Domenic Martino - Non Executive Chairman
Domenic Martino was the Chief Executive Officer of Deloitte Touche Tohmatsu in
Australia from 2001 to 2003. During that time he was also a member of the Global
Executive Committee of Deloitte Touche Tohmatsu International. Prior to taking on the
position as Chief Executive Officer he was the Managing Partner of Deloitte Touche
Tohmatsu's New South Wales operations from 1998 to 2001. He was a Partner of
Deloitte Touche Tohmatsu and its predecessor firms from 1981 to 2003 during which
time, in addition to a number of management operational roles, he specialised in the
corporate finance area including mergers and acquisitions, initial public offerings and
strategic opportunities. Domenic Martino is one of the founding Directors of Energy
Investments Limited and is currently its Chairman. He was also a founding Director and
past Chairman of Sydney Gas Ltd, an emerging major gas producer in New South
Wales, and was instrumental in that company's acquisition of its Sydney Basin Project in
1997.
Kevin Dundo - Non Executive Director
Kevin Dundo practices as a lawyer in Perth. He specializes in the commercial and
corporate areas (in particular mergers and acquisitions) with experience in the mining
sector, the service industry and the financial services industry. Mr Dundo gained a
Bachelor of Commerce from the University of Western Australia and a Bachelor of Laws
from the Australian National University. He is a member of the Law Society of Western
Australia, a Member of the Law Council of Western Australia, a Fellow of the Australian
Society of Certified Practising Accountants and a Member of the Australian Institute of
Company Directors. Mr Dundo is a Non Executive Director of Imdex Limited (ASX: IMD)
and NuStar Mining Corporation Limited (ASX: NMC)
Paul Page - Non Executive Director
Paul Page is co founder of boutique investment bank Arthur Phillip Pty Limited and a
director of ASX listed companies Alexander Securities Limited (ASX: ALE), Microview
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Limited (ASX: MVL) and Etick Limited (ASX: ETK). He commenced his career as an
accountant with KPMG and brings a strong accounting background to the Company. He
has substantial experience in the equity capital markets operating in both large and
small firm environments. This background complements his strong financial network,
capital raising and broking skills gained in stockbroking. He has held roles as director
and head of equity capital markets for a number of broking firms and has successfully
raised funding and listed a range of companies on the ASX.
The Executive Management Team will be as follows:
Murray Mansell,who joined ComputerCORP in late 2000 as a financial consultant and
accepted the role of CFO shortly thereafter. Assumed the COO role in early 2002, with
responsibility for operations, logistics and finance. Achieved growth in annual turnover
from $40m to $128m in last 5 years. Murray commenced his career in public accounting
with his own practice centred on management and consolidation. He has a Degree in
Accounting and has sat on the Board of Apex Australia, Homes for the Aged and the
YMCA.
Dee Broadmore, who has been in the IT Industry for 8 years and joined ComputerCORP
in October 2003 as Strategic Marketing Manager. Dee was previously Group Marketing
Manager for Europe's largest privately owned IT Group and was instrumental in
international expansion into 7 countries. She successfully re-branded the
ComputerCORP business, and has continually developed the business model and
relationships with key partners. Dee holds an IPD in HR, Training and Marketing, a
Diploma in Marketing and a Certificate in Organisational Change.
Peter Cappendell has been in business to business sales for 18 years and specifically
the IT industry for 15 years. Peter joined ComputerCORP in 1993 and was promoted to
State Manager for WA in 2003. His key achievements have included his ability to
achieve profitable growth in WA based on his philosophy of a structured selling
approach to customer engagement. Peter built key relationships with customers
including Woodside, Western Power and Worley. Peter holds a Diploma in Operational
Salesmanship.
Geoff Cox has been in the IT industry for 18 years and joined ComputerCORP in
September 2001 as National Services Manager responsible for 120+ engineering staff
and the delivery of all technical IT solutions and technologies. He commenced his
career developing financial reporting systems in a mainframe environment, before
moving into infrastructure support and management. Geoff previously worked for Water
Corporation, CSC and Ferntree in key service delivery management roles.
Craig Singleton joined ComputerCORP in 2001 as Company Accountant and was
promoted to Financial Controller in early 2003. He started his career at Hewlett Packard
in Melbourne in 1994 as the Inter Company Accountant. Subsequently moved within
Hewlett Packard to become Admin Analyst and assumed responsibility for all Analysts
across Australia. Craig had 2 years experience in London UK, before returning to
Hewlett Packard as an Indirect Tax Accountant.
Greg Carter joined ComputerCORP in October 2001 and has over 15 years experience
in the IT industry in various roles including Service Manager, Logistics Manager and
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Operations Manager. Greg successfully managed the acquisition team, and subsequent
integration team, for the 2005 acquisitions in Tasmania and the ACT.
Change to the Nature and Scale of Activities
The acquisition of ComputerCORP will result in a change to the nature and scale of the
Company's activities. As a result, the Australian Stock Exchange (ASX) has informed the
Company that this change requires approval by the Company's shareholders under
Chapter 11 of the ASX Listing Rules. In the event that shareholder approval is obtained,
the Company will also be obliged to meet the requirements of Chapters 1 and 2 of the
Listing Rules as if applying for admission to the Official List. One of these requirements
is the lodgment of a prospectus to fully inform the market of the Company's activities.
It is anticipated that a General Meeting of the Company's shareholders will be held in
mid May 2006 to approve the following resolutions:
- Acquisition
of
ComputerCORP
- Change of nature and scale of activities
- Consolidation of capital
- Change of name to ComputerCORP Limited
- Appointment of new directors comprising Dominic Martino and Kevin Dundo
- Approval to place 24 million shares at 25 cents each to raise $6 million.
A full explanatory statement will be provided to shareholders with the Notice of Meeting.
It is expected that the voluntary trading halt of trading in the Company's securities will be
lifted prior to the opening of trade on 31 March 2006, provided the ASX is satisfied that
the market is fully informed as to the Company's proposed change of activities.
Trading in the Company's securities will be suspended from the day of the General
Meeting proposed for 25 May 2006 until the requirements of Chapter 1 and 2 of the
Listing Rules are satisfied. The Company expects to have satisfied Chapters 1 and 2 of
the Listing Rules in time to allow a re-quotation of its securities by early June 2006.
Please refer to the Anticipated Timetable below for more details.
Purchase Consideration
The purchase consideration pursuant to the heads of agreement is as follows:
1. Cash payment of $4,900,000
2. The issue of 14 million fully paid ordinary shares in Etick at 25 cents per share or 80%
of the weighted volume average share price for the 5 days trading prior to the proposed
General Meeting, whichever is the greater(on a 1 share for every 5 held post
consolidation basis).
3. The issue of 2 million Etick options exercisable at 20 cents and expiring 30 August
2008 (on a 1 for 5 post consolidation basis); and
4. The issue of 6,000,000 (on a 1 for 5 post consolidation basis) Management
Performance Shares (the terms of which are set out in full later in this document).
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Conditions Precedent
The Heads of Agreement is subject to a number of conditions precedent including:
(a) Etick raising $6,000,000 by issuing 24,000,000 shares at an issue price
of $0.25 or 80% of the weighted volume average share price for the 5
days trading prior to the proposed General Meeting, whichever is the
greater (on a 1 for 5 post consolidation basis);
(b) By 27 April 2006 (or such later date as agreed by the parties) receipt of
an independent expert's report (if required) by Etick's directors
confirming that the transaction is fair and reasonable to Etick's
Shareholders;
(c) The passing of such resolutions as may be necessary to give effect to
the transaction at a meeting of Etick's shareholders convened in
accordance with the Corporations Act and Listing Rules by 31 May
2006 (or such later date as agreed by the parties);
(d) execution of a formal share purchase agreement (if required) by the
parties by 27 April 2006 (or such later date as agreed by the parties);
(e) If required by either ASX or ASIC, completion of a prospectus and
lodgement of the prospectus with ASIC by no later than 7 days prior to
the meeting of Etick's shareholders referred to in paragraph (c) above
(or such later date as agreed by the parties);
(f) receipt of all necessary ASIC, ASX and other regulatory approvals in
respect of the transaction by 27 April 2006 (or such later date as
agreed by the parties); and
(g) there being no material adverse change in the financial position or
condition of Etick or ComputerCORP other than any such change as
contemplated under heads of agreement.
Placement
On a post consolidation basis, the Company proposes to raise $6,000,000 by the
placement of 24 million ordinary fully paid shares at 25 cents per share or 80% of the
weighted volume average share price for the 5 days trading prior to the proposed
General Meeting, whichever is the greater. Arthur Phillip Pty Ltd and Tricom Equities
Limited, a Participant of ASX Group, have been engaged to advise on the placement.
Capital Structure
On the basis that the Company completes the placement on the terms set out above, the
final capital structure will be as follows:
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Ordinary Options
Current Issued Capital 27,800,000
Consolidation
1:5
14,636,786
5,560,000
Shares Offered
Pursuant to Placement @ 25c 24,000,000
Shares Issued to Vendors 14,000,000 2,000,000
Corporate
Advisory
2,000,000
Total Issued Post Completion 52,636,786 9,560,000
Management Performance Shares 6,000,000
(Over 4 years subject achieving
key performance criteria)
Total
Fully
Diluted
Capital
68,196,786
All of the options issued by the company are of the same series being exercisable at 20
cents and expiring 30 August 2008.
Management Performance Shares
Each Management Performance Share entitles the holder to convert a Management
Performance Share into a fully paid ordinary share in Etick in accordance with the
milestones set out below:
Milestone Management
Performance
Shares
Class "A" - Upon management achieving $2,000,000 1,500,000
profit after tax
Class "B" - Upon management achieving $3,000,000 1,500,000
profit after tax
Class "C" - Upon management achieving $4,000,000 1,500,000
profit after tax
Class "D" - Upon management achieving $5,000,000 1,500,000
profit after tax
6,000,000
(i) ASX approval is required to the terms and conditions of the
class of non-voting Management Performance Shares.
--------------------------------------------------------------------------------
(ii) For the avoidance of doubt, the Milestones referred to above
relate to profit after tax for the financial period commencing
1 July 2006 and each subsequent financial period ending 30
June.
Voluntary Escrow
The recipients of 12 million fully paid ordinary shares that form part of the purchase
consideration have agreed with Etick to enter into voluntary escrow agreements that will
restrict their ability to deal with these securities until 1 July 2007.
Balance Sheet
A draft pro-forma Balance Sheet for Etick incorporating the effect of the acquisition and
placement is attached.
Anticipated Timetable
The anticipated timetable for completion of the acquisition of ComputerCORP and the
balance of the matters referred to above is set out below:
Event
Date
Announcement of Transaction 4 April, 2006
Completion of Due Diligence 20 April, 2006
Dispatch Notice of Meeting seeking approval
for
Transaction
20
April,
2006
Lodgment of Prospectus with the ASIC 20 April, 2006
General Meeting to approve Transaction 25 May, 2006
Suspension of Etick's securities from trading
on ASX at the opening of trading 25 May, 2006
Opening of Offer under the Prospectus 25 May, 2006
Closing Date of Offer under the Prospectus 1 June, 2006
Completion of acquisition of ComputerCORP 8 June, 2006
Anticipated date the suspension of trading is
lifted and Etick's securities commence trading
again
on
ASX
12
June,
2006
Full details of the proposed transaction and capital raising will be forwarded to
shareholders and participating option holders in due course, subject to Etick confirming
its intentions following its due diligence investigations.
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It is the board's view that the acquisition of ComputerCORP will give all
shareholders of Etick the opportunity to participate in the growth of a profitable IT
company that should achieve strong results over the forthcoming years.
For further information, please contact:
Paul
Page
Director
Etick Ltd
Tel: (02) 8257 6500
Fax:
(02)
8257
6501
