Acquisitive communications solutions provider AdEPT Telecom plc (LON:ADT) has inked a new banking facility and hit the acquisition trail again.
The company said it had outgrown its old £15mln revolving credit facility; its new five-year revolving credit facility will be for £30mln.
The new syndicated debt facility provides increased scale and has a more flexible structure when compared to the company's previous debt facility agreement, AdEPT said.
The facility will give the company added firepower with which to pursue its highly successful acquisition strategy.
Talking of which, the company has agreed to acquire Our IT Department Limited, a specialist provider of information technology (IT) services, for an initial cash consideration of £4.75mln, minus the net debt but adjusted for working capital.
Further consideration of up to £3.75mln may be payable in cash dependent upon the trading performance of OurIT Group following the acquisition.
AdEPT said the acquisition is expected to enhance its earnings right from the get-go.
AdEPT and OurIT Group have both adopted strategies that are light on capital assets and which are highly cash generative.
Both groups are dedicated to offering a full suite of flexible IT, data and unified communication strategies, so the acquisition looks like one straight out of the AdEPT play-book.
OurIT made a profit before tax in 2015 of £259,000 on turnover of £3.71mln, while its subsidiary Brightvisions, which AdEPT is also acquiring, made a profit before tax of £167,000 on turnover of £1.46mln.
“OurIT Group is an excellent fit because, like AdEPT, it is asset-light, complements and builds upon AdEPT's existing expertise and skills, and further extends the product and service portfolio by adding IT services,” said Ian Fishwick, chief executive of AdEPT.
“With the increasing convergence between telecoms and IT, this is an important step forward in our strategy to become a fully managed service provider. OurIT Group has a well-developed customer base with long term relationships across a range of medium and large enterprises. The acquisition is expected to be earnings enhancing from completion," he added.
AdEPT's nominated adviser, Northland, said today's announcements mark a step change in the company's strategy, "in both depth of services provision and scale of near- and medium-term operations.”
“AdEPT has long-signalled that the provision of unified telecom services requires a level of IT expertise which matches the requirements of organisations embracing the products and services offered by expert systems, cloud-based and other enhancements. The acquisition of OurIT Group makes AdEPT’s – already established - appreciation of this trend a reality, and increases the scope of its unified offering,” the broker continued.
“The expanded debt facility shows that AdEPT has both the aspiration and now the ability to further its strategy, and at a potentially more ambitious scale,” the broker concluded, adding that its earnings forecasts are under review in the wake of the acquisition.
Shares in AdEPT were little changed in mid-morning trading.
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