22nd Oct 2013 08:14
LONDON (Alliance News) - Daily Internet PLC Tuesday bought a UK-based internet infrastructure company, launched a share placing to fund the deal, and strengthened its balance sheet by conducting a debt-for-equity swap with some directors and shareholders.
The AIM-listed web hosting provider said it would buy Netplan Internet Solutions Ltd for at least GBP2.5 million and launched a GBP3 million placing to help fund the deal.
Additionally, it said it certain directors had agreed to swap GBP170,966 worth of loans for equity, Hawkstone Capital Ltd agreed to swap a GBP503,660 loan and existing shareholder John Thompson agreed to swap GBP65,000. All the swaps will be done at the proposed placing price of 1.5 pence a share.
The dilution in capital caused by the placing, which represents about 54.1% of the company's existing share capital, and the debt-for-equity swap, meant the company was the biggest faller on AIM Tuesday morning. The stock was down 35.5% at 2.58 pence.
The placing is expected to raise GBP2.7 million net of costs, which will be used to fund the acquisition. The company will hold a general meeting to approve all the proposals, and hopes to do the placing November 19.
Daily Internet said buying Netplan Internet Solutions will expand its product reach and give it a stronger foothold in its target markets. Key Netplan employees will also give it "significant" dedicated server expertise.
Netplan specializes in VMware cloud hosting and has a database of 840 customers. About 10% of its business is done in the EU and Russia. It generated revenues of GBP1.1 million in the 12 months to September 30, 2012 and reported earnings before interest and tax excluding one-off items of GBP221,428.
"The Acquisition is the first step to creating a one-stop supplier of reliable, scalable, high performance and resilient infrastructure based hosting products within the fast-growing UK and European markets with a multi-brand and multi-location strategy," Daily Internet said in a statement.
It will pay an initial cash consideration of GBP2.5 million and then a further GBP750,000 after September 2014 as long as Netplan's EBIT is GBP500,000 or more in the financial year that ends in that month.
By Steve McGrath; [email protected]; @stevemcgrath1
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