[AusNOG] Vocus the target of a private equity takeover

[Jared Hirst]

Available here:
https://www.crn.com.au/news/vocus-receives-21-billion-acquisition-proposal-from-private-equity-firm-kohlberg-kravis-roberts-464401


Cheers,

Jared

On Thu, Jun 8, 2017 at 11:13 AM, Peter Tiggerdine <ptiggerdine at gmail.com>
wrote:

> Article has being pulled already.
> Regards,
>
> Peter Tiggerdine
>
> GPG Fingerprint: 2A3F EA19 F6C2 93C1 411D 5AB2 D5A8 E8A8 0E74 6127
>
>
> On Thu, Jun 8, 2017 at 9:12 AM, Sam McLeod <ausnog at smcleod.net> wrote:
> > This makes me a little worried,
> > I hope it doesn't mean that Vocus will go the way of several (most) other
> > ISPs...
> >
> > "A private equity firm is looking to take over Vocus while the share
> price
> > is low. _Kohlberg Kravis Roberts & Co want to buy out Australia's 4th
> > largest telco at $3.50 a share
> > http://www.zdnet.com/article/vocus-receives-au3-50-per-
> share-takeover-proposal
> > which was a decent premium over the $2.86 they were trading at yesterday
> > (they've shot up to $3.45 now). The Vocus board have said they're looking
> > into it. A huge number of NBN RSPs are basically Vocus resellers, so
> it'll
> > have a decent impact on the industry if a private equity firm takes over
> and
> > makes radical changes."
> >
> > The article reads:
> >
> > ---
> >
> > Vocus Communications has announced receiving a takeover proposal from
> > Kohlberg Kravis Roberts & Co (KKR) to acquire 100 percent of its shares
> at a
> > price of AU$3.50 per share via a scheme of arrangement.
> >
> > The preliminary, indicative, and non-binding proposal by KKR is subject
> to
> > whether Vocus' net debt does not exceed AU$1.1 billion as of June 30;
> > earnings before interest, tax, depreciation, and amortisation (EBITDA) is
> > between AU$365 million to AU$375 million for the current financial year,
> and
> > was not driven by any abnormal or one-off items; and Vocus' existing
> asset
> > base is maintained.
> >
> > To look into the proposal, Vocus has formed an independent board
> committee
> > (IBC), chaired by Vocus chair David Spence and comprised of Vocus'
> > non-executive board directors Rhoda Phillippo, Craig Farrow, Robert
> > Mansfield, and Jon Brett.
> >
> > Should the board approve, the indicative proposal would also need
> > shareholder, court, and regulatory approval.
> >
> > "The Vocus board notes that there is no certainty the indicative proposal
> > will result in an offer for Vocus, what the terms of any offer would be,
> or
> > whether there will be a recommendation by the Vocus board," Vocus said
> in a
> > statement on Wednesday morning to the Australian Securities Exchange.
> >
> > "The Vocus board will update shareholders when the IBC has completed its
> > assessment."
> >
> > The proposal follows Vocus revising its guidance for the 2017 financial
> year
> > last month, with revenue down by AU$100 million, underlying EBITDA down
> by
> > between AU$65 million and AU$75 million, and net profit down by AU$45
> > million to AU$50 million. Vocus' net debt is expected to be between AU$1
> > billion and AU$1.1 billion.
> >
> > Underlying EBITDA is now expected to be between AU$365 million and AU$375
> > million, net profit between AU$160 million and AU$165 million, and
> revenue
> > at AU$1.8 billion, Vocus CEO Geoff Horth said.
> >
> >
> > The company attributed AU$10 million of the EBITDA reduction to the
> impact
> > of lower than expected billings and an increased headcount across its
> > Enterprise and Wholesale division; AU$5 million to low earnings in its
> mass
> > market energy business due to "volatility created by extreme weather
> events
> > in 3QFY17"; AU$12 million to higher expenses than expected, particularly
> on
> > technology; AU$33 million to an accounting review of "the negotiated
> > contract terms on a number of large projects"; and AU$10 million to other
> > trading variances.
> >
> > The drop in expected net profit is due to pre-tax expenses of AU$113
> > million, including AU$61 million from the non-cash amortisation of
> acquired
> > customer intangibles; AU$26.4 million from the amortisation of acquired
> > software; AU$21.4 million from acquisition and integration costs; and
> AU$5.6
> > million from the non-cash book loss on the divestment of the Connect 8
> joint
> > venture and the Cisco HCS voice platform.
> >
> > Revenue will be lower than previously forecast thanks to a AU$12 million
> > take-back from lower billings across its Enterprise and Wholesale
> division;
> > AU$40 million as a result of the accounting review, as it was found that
> > revenue from the projects involved would be earned in future periods; and
> > AU$20 million from the divestment of the Aggregato Australia business and
> > the Cisco HCS voice platform.
> >
> > Vocus had in February announced a net profit of AU$47.2 million, up by
> > almost 100 percent, due to its acquisitions of M2 and Nextgen. This
> mirrored
> > Vocus' FY16 results showing a 223 percent rise in net profit, up to
> AU$64.1
> > million, attributed to its AU$1.2 billion acquisition of Amcom.
> >
> > Statutory EBITDA for the first half of FY17 was AU$168.3 million, up from
> > AU$60.7 million a year previous, while underlying EBITDA -- excluding
> > acquisition, integration, and other costs -- was AU$187.2 million, up
> from
> > AU$62.3 million. Vocus' underlying net profit was AU$91.85 million, up
> from
> > AU$27.37 million.
> >
> > Revenue for the first half of the financial year rose significantly, from
> > AU$176.3 million up to AU$888.2 million.
> >
> > Vocus merged with M2 last February to form the third-largest
> > telecommunications provider in New Zealand and the fourth-largest in
> > Australia worth more than AU$3 billion. It raised AU$652 million last
> July
> > to acquire Nextgen Networks for AU$700 million, along with the North West
> > Cable System for AU$134 million and the Australia Singapore Cable project
> > for AU$27 million.
> >
> > ---
> >
> > --
> > Sam McLeod
> > @s_mcleod | smcleod.net
> >
> > Words are my own opinions and do not necessarily represent those of my
> > employer or partners.
> >
> >
> >
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> > AusNOG at lists.ausnog.net
> > http://lists.ausnog.net/mailman/listinfo/ausnog
> >
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