MNF Group Ltd (ASX:MNF) has entered a binding agreement with Vonex Ltd (ASX:VN8) for the part-sale of its Direct Business for $31 million.
All conditions of the conditional term sheet signed with Vonex on June 27, 2021, have been satisfied, including detailed due diligence with completion of the binding agreement set for early August.
The divestment of MNF’s Direct Businesses is in line with its strategy to simplify the business and drive growth in its CPaas and UCaas voice services.
Earning guidance
Proceeds from the sale will be reinvested into the growing wholesale business and expansion offshore.
The company also re-affirmed its earnings guidance for the 2021 financial year, which is expected to be within the top half of the range provided of $40.0 million to $43.0 million EBITDA.
Transaction details
The $31 million sales deal comprises $20 million of cash payable on completion and $11 million of deferred cash payable in monthly instalments over 12 months.
Vonex has secured a $16 million debt facility from Longreach Credit Investors which will be fully drawn down to partially fund the upfront consideration for the acquisition.
Besides this, Vonex is also raising up to $12 million via a two-tranche placement, through the issue of 109 million shares at 11 cents per share, and will offer a Share Purchase Plan (SPP) to existing eligible shareholders to raise up to an additional $2 million.
Strategic rationale
MNF’s Direct Business sells cloud phone, internet and mobile services directly to SMEs and residential customers in Australia, as well as dedicated audio and video conferencing business.
This proposed transaction will materially expand Vonex's footprint of small-to-medium and residential customers across Australia and will see the company migrate about 5,250 new business customers to its platform.
“Financial scale and market relevance”
Vonex managing director Matt Fahey said: “Our acquisition of part of MNF Group’s Direct Business will transform Vonex by delivering financial scale and market relevance.
“Through this deal, we are welcoming a highly experienced new team of 30 staff, more than 5,000 new SME customers and more than 180 new channel partners to our platform, and we expect to almost double Vonex’s annualised recurring revenue on a full-year basis.