TIDMADT
RNS Number : 8021M
AdEPT Telecom plc
02 August 2017
AdEPT Telecom Plc
("AdEPT" or the "Company")
GBP7.3m BGF funding and Atomwide acquisition
NEW CONVERTIBLE LOAN INSTRUMENT
-- GBP7.3m investment from BGF via convertible loan instrument
-- Conversion price GBP3.93 per ordinary share
Proceeds of BGF investment, plus existing bank facility to be
used to acquire Atomwide Limited
AdEPT Telecom, one of the UK's leading independent providers of
unified communications and IT managed services, today announces
that it has signed a GBP7.3 million convertible loan instrument
with Business Growth Fund plc ("BGF").
The proceeds from the convertible loan instrument, plus GBP4.7
million of the existing bank facility, will be used by the Company
to fund the acquisition of Atomwide Limited ("Atomwide").
The loan instrument is convertible into ordinary 10p shares in
the Company at a price of GBP3.93.
Roger Wilson, Chairman of AdEPT, commented:
"Following their initial equity investment in AdEPT during 2016
we are delighted to have obtained further support from the team at
BGF to work alongside our existing debt providers, Barclays and The
Royal Bank of Scotland, and provide funding for the acquisition of
Atomwide. This gives us the market leading position in IT for
education in London."
ACQUISITION OF ATOMWIDE LIMITED
The Board of AdEPT also announces that it has signed an
agreement with effect from 1 August 2017 to acquire the entire
issued share capital of Atomwide a well-established UK based
specialist provider of IT services to the education sector ("the
Acquisition").
Acquisition highlights
-- Initial consideration of GBP12 million plus surplus cash of Atomwide at 31 July 2017
-- Expected to be earnings enhancing from completion
-- AdEPT group revenue run rate anticipated to increase by approximately 19%
-- Long term relationship and key technology partner for London Grid for Learning
-- Customers include 4,000+ schools with over 2 million users
-- Highly complementary product set for telecommunication and IT convergence
-- Atomwide own the IPR for their education applications which
are hosted on-site at its data centre in Orpington
-- Highly experienced senior management team to remain with Atomwide
Strategic rationale
The acquisition of Atomwide positions AdEPT as the leading IT
provider to schools across London, supporting around 2 million
users of Atomwide's products and services. Since 1987 Atomwide has
provided IT solutions for approximately 4,000 UK schools, Local
Authorities and Regional Broadband Consortia as well as a range of
other establishments nationwide. Atomwide has more than 50
experienced staff, including an in-house software development
team.
Atomwide offers its clients outsourced managed IT and telecoms
solutions focused on the education sector. The acquisition of
Atomwide further extends AdEPT's ability to provide a full suite of
specialised IT and telecoms products to public sector
customers.
AdEPT and Atomwide have both focused on recurring revenue and
capital asset light strategies which are highly cash generative.
Nearly 80% of Atomwide revenues and gross margin are from recurring
products and services.
Information on Atomwide
Atomwide, founded in 1987, is a highly accredited IT services
provider with over 30 years experience, offering highly specialised
IT support services and technology solutions to approximately 2
million users in over 4,000 schools.
Atomwide is the chief technology partner for London Grid for
Learning, supplying IT services to around 3,000 schools in London.
All of the bespoke services have been created by the in-house
development team and are supported by the highly experienced team
of IT professionals based at Atomwide's premises in Orpington,
Kent.
All of the senior management team which are responsible for the
strategic direction, technical development and the day-to-day
operations of Atomwide are to be retained within the business
post-acquisition.
The statutory accounts of Atomwide for the year ended 31 March
2017 reported turnover, operating profit and profit before tax of
GBP7.5 million, GBP1.9 million and GBP1.9m respectively. Capital
expenditure in the year ended 31 March 2017 was GBP0.1 million. Net
and gross assets at that date were GBP6.8 million and GBP8.8
million respectively.
Consideration
Initial consideration for the Acquisition is GBP12 million plus
the surplus cash of Atomwide at 31 July 2017 (estimated to be
GBP6.2 million). The initial consideration will be funded out of
the proceeds of AdEPT's new convertible loan from BGF and the
existing bank facility. This retains headroom in the existing bank
facility to support further acquisitive growth. Further
consideration of up to GBP8 million may be payable in cash
dependent upon the trading performance of Atomwide in the 12 months
post-acquisition.
Ian Fishwick, Chief Executive of AdEPT, commented:
"We are delighted to have acquired such a high quality, well-run
and profitable business with a strong management team. Atomwide is
an excellent fit because it gives us a strong market position in IT
for education, particularly in London. This complements our
acquisition of OurIT in February 2017 which is focused on London
and South East commercial customers. After the Atomwide acquisition
approximately two thirds of AdEPT revenue will be generated from
managed services. The acquisition is expected to be earnings
enhancing from completion."
This announcement contains inside information.
For more information please contact:
AdEPT Telecom Plc
Roger Wilson, Chairman 07786 111 535
Ian Fishwick, Chief Executive 01892 550 225
John Swaite, Finance Director 01892 550 243
Northland Capital Partners Limited
Nominated Adviser
Edward Hutton/Gerry Beaney
Broking
John Howes 020 3861 6625
About AdEPT Telecom plc:
AdEPT Telecom plc is one of the UK's leading independent
providers of unified communications and IT solutions. The Company
provides a complete communications portfolio of unified
communications, IP telephony, equipment installation, managed
services, IT services, Wi-Fi, IT and communications hardware and
data connectivity products. AdEPT's tailored services are used by
thousands of customers across the UK and are brought together
through the strategic relationships with tier-1 suppliers such as
BT Openreach, Vodafone, Virgin Media, Avaya, Microsoft, Dell and
Apple.
AdEPT is listed on the London Stock Exchange (Ticker: ADT). For
further information please visit: www.adept-telecom.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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