Norwood to sell telephony assets

By Edited announcement
Tuesday, 7 November, 2006 - 15:05

Subiaco-based technology company Norwood Systems Ltd has announced plans to sell the assets of its telephony business to NSW-based Jtech Australia Ltd.

A Norwood issues statement says the sale will increase cash reserves at settlement and reduce the future costs of maintaining the company operations.

 

The full text of a company announcement is pasted below

The directors of Norwood Systems Ltd are pleased to report that the company has entered into a conditional agreement to sell the operating assets of the telephony business of Norwood Systems Ltd. The agreement is in the form of a binding terms sheet.

The purchaser, Jtech Australia Pty ("Jtech") is a non-associated party. The consideration is $450,000 payable in three equal installments. The first installment is payable on settlement, the second within six months of settlement and the final installment within 12 months of settlement. Jtech can elect to terminate at the second or final installment without penalty. Source code for Norwood's Enterprise Mobility software will be held in escrow until the final payment is received. Jtech also undertakes to meet the immediate continuing liabilities of the business and may offer employment to existing Norwood employees. A pro-forma balance sheet is attached.

The sale is subject to approval by shareholders in a general meeting. A notice of meeting will be forwarded to shareholders in the near future.

Norwood anticipates it will continue the monthly reporting of cash movements to the market.

The company's entitlement issue prospectus of 24 August 2006 was not fully subscribed, and a shortfall of 18,937,373 shares with attaching 20 cent options may be placed by the Directors and the Underwriter in their discretion.

Norwood's chairman Mike O'Donnell said: "In the interests of all shareholders the Board considers that the offer should be accepted."

"It will allow the company to refocus attention on other potential opportunities for the Company that may represent a better return to shareholders," he said.

The principle financial effects of the sale will be to increase cash reserves at settlement, and to reduce the future costs of maintaining the unprofitable operations.

Set out below is an un-audited pro forma Consolidated Statement of Financial Position of the Economic Entity at 30 September 2006 incorporating the following:

  • The expenditure of operational costs for the months of October and November 2006 including final payments to staff and business creditors.
  • The receipt of final shareholder subscriptions of $186,000 and issue of equity pursuant to the entitlements issue prospectus of 24 August 2006.
  • The receipt of $165,000 (including GST) on settlement and recognition of the balances due as receivable.

    • The pro forma Consolidated Statement of Financial Position of the Economic Entity at 30 September 2006 have been prepared to provide shareholders with information on the pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.