Servtech to raise $1m and revamp board

22/11/2017 - 11:32

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Recently listed tech company Servtech Global Holdings has announced a capital raising of up to $1 million, through a convertible loan facility, and a board revamp as the company seeks to overcome sluggish revenue growth.

Servtech sold its rent roll business in September.

Recently listed tech company Servtech Global Holdings has announced a capital raising of up to $1 million, through a convertible loan facility, and a board revamp as the company seeks to overcome sluggish revenue growth.

Osborne Park-based Servtech will receive an initial investment of $500,000 from a consortium of sophisticated investors, including real estate company Ausnet Financial Services, with an option to increase the investment to $1 million.

The company has entered into a binding convertible loan facility agreement with the consortium, named Servnote, with the conversion price to be the lower of 2 cents or 80 per cent of the volume-weighted average price five days prior to the conversion.

The facility has a six-month maturity date and a 10 per cent interest rate with the agreement subject to shareholder approval.

The funds will be used for general working capital and are secured by a fixed charge over the company’s assets.

The real estate oriented firm sold its rent roll business in September and said it had received about half of the $1.5 million sale price.

“The transfer of ownership of the various properties under management by the rent roll business has fallen well short of expectations, with an extraordinary proportion of property owners deciding not to sign transfer agreements that would have generated income for Servtech,” the company said in a statement to the ASX.

Servtech said the $1 million loan facility came about after a review of the business.

“The impact of changing market conditions resulted in slower than expected revenue growth which resulted in an unacceptably high and unsustainable rate of cash burn,” Servtech said.

“This, together with funds from the sale of the rent roll business falling substantially short of expectations, demanded the company implement rapid cost cutting and consolidation initiatives.”

The company has also announced a board restructure, with non-executive directors Bryn Hardcastle and David Newman, along with chairman Nick Cernotta and the company secretary all resigning today.

Ziptel chief executive Bert Mondello and Gianmarco Orgnoni have been appointed as non-executive directors in an attempt to provide a board with more technology experience.

Derek Hall will takeover as company secretary, a position he also holds at Ziptel.

Mr Mondello has extensive experience in the technology sector including stints at Optus and Vodafone before running telecommunications business Ziptel.

Mr Orgnoni has worked in corporate finance and investment banking with experience dealing with companies in technology and real estate.

As part of the loan facility Servtech has formed a strategic relationship with Ausnet, a Perth-based real estate and financial services company.

Servtech managing director Brett Quinn said the partnership would help grow Servtech’s real estate business.

“We see this as a strategic partnership which can deliver benefits to both companies,” he said

“Our focus is to continue to develop our core business technology and seek out opportunities for growth through industry diversification and geographic expansion.”

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