(Alliance News) - Adept4 PLC on Wednesday said it has agreed to acquire cloud and IT business CloudCoCo Ltd in an all-paper deal and has agreed a debt restructure.
Adept4 will issue loan notes to CloudCo's sellers which will be exchangeable, once the deal completes, for 218.2 million Adept4 shares - representing around 49% of its enlarged share capital. Based on the closing price of 2.8 pence per Adept4 share on Tuesday, the shares were worth GBP6.1 million.
On Wednesday morning, shares in Adept4 were up 7.2% to 3.00p, meaning the deal would be worth about GBP7 million.
IT as-a-service firm Adept4 will hold a general meeting on October 21 to vote on the issue of the acquisition shares, plus a change in the enlarged company name to CloudCoCo Group PLC.
Once the buy is complete, CloudCoCo Chair Andy Mills will become chief executive of Adept4.
Adept4 also is refinancing its debt. Business Growth Fund PLC has agreed that GBP1.5 million of the loan notes it currently holds in Adept4 will be cancelled, with the remaining GBP3.5 million noted bought by MXGC, a subsidiary of MXC Capital Ltd.
The note terms will be revised, with the term of the notes extended to 2024 and interest changed to 12% - to be rolled up and compounded annually and paid at the end of the term. MXGC also will provide a two-year working capital facility of up to GBP500,000, at a 12% interest rate, and cancel its outstanding Adept4 warrants.
MXC Capital holds a 30% stake in Adept4 and was a founder shareholder, paying at that time GBP100,000 for an 11% stake. As part of the CloudCoCo buy, MXGC will sell its entire shareholding to Mills "at the same value as its original investment to ensure he has a meaningful stake in the enlarged group going forwards".
Once the deal is complete, MXC Capital will hold a 15% stake in Adept4's enlarged share capital
Adept4 Non-Executive Chair Simon Duckworth said: "We are delighted that, conditional on shareholder approval, we have agreed to acquire CloudCoCo. We are proposing to acquire a business which has expanded rapidly since establishment and, by harnessing CloudCoCo's proven and experienced salesforce with our existing operations, we believe that there is a clearly defined opportunity to return Adept4 to growth. We have also reached agreement, subject to completion of the acquisition, to revise the terms and reduce the level of the group's indebtedness. We view these proposals as positive developments as we seek to recover value for our shareholders".
By Anna Farley; annafarley@alliancenews.com
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