Red Gum to acquire security firms

Perth companies MCS Security Group and Intiga Security are planning to list on the ASX through a reverse takeover of Red Gum Resources, following a similar move by Threat Protect Australia, which is also pursuing a backdoor listing.

Red Gum intends to issue a prospectus at the end of September to raise $4.5 million through an offer of 90 million shares at a price of 5 cents a share.

Upon completion of the acquisition, Red Gum intends to rename itself MCS Services.

MCS Security Group, owned by Paul Simmons, will be purchased for 30 million Red Gum shares as well as $3.78 million in cash.

Intiga's founder and owner John Boardman will receive 18 million shares with the possibility of an additional 6 million shares should MCS Services make a net profit after tax of above $1.92 million in the 2016 financial year.

Mr Simmons will become chief executive of the combined company, while Mr Boardman will be chief operations officer.

Both men will receive shares under an incentives scheme over the next three years, up to a total of 20 million shares each.

Consultants to the transaction will be awarded up to 8 million shares in the company.

Red Gum says that MCS Securities and Intiga together made a normalised NPAT of $1.69 million in the 2015 financial year.

The capital raising will be managed by Patersons Securities.

This is the second backdoor listing deal announced this year to involve a Perth security company; in April of this year East Africa Resources made public its intentions to acquire Threat Protect Australia.

It also follows Red Gum’s announcement in February this year that it was cancelling its acquisition of Australian Travel Group after the Australian Securities and Investment Commission impeded the issue of shares from Red Gum’s prospectus.

Red Gum shares were down 18 per cent today to 4.5 cents a share at 1345 AWST.

The company expects to complete the transaction and relist as MCS Services by the end of October.