SP Telemedia to pay $373m in cash for Pipe Networks

Stuart Corner
Wednesday, 11 November 2009 10:56

IT Industry - Deals

Pipe's directors have unanimously recommended shareholders to accept the offer, in the absence of a higher offer and subject to an expert opinion on the merits of the offer. The transaction is also subject to SPT's due diligence, to be completed by 11 December, and to SPT raising the necessary finance.

The all cash offer will see SPT having to find $373 million and runs counter to analyst expectations that SPT would seek to limit funding demands with a partial equity offer. Daniel Blair of Southern Cross Equities said last week that SPT's current debt position "may allow it to borrow $200-250m leaving $100-150m to be equity funded."
 
SP Telemedia had a good FY2009, reporting a net cash inflow from operations before interest, tax, capex and debt repayments of $153m enabling it to make repayments in the year of $81m against its bank debt facilities leaving $58m outstanding and putting it $72m ahead of its debt repayment schedule with its next compulsory debt repayment not due until February 2011. It finished the year with cash reserves of $17 million.

The deal will be via a scheme of arrangement and subject to approval of Pipe shareholders at a scheme meeting expected to be held in March 2010. Pip Networks is being advised by Minter Ellison and SPT by Macquarie Capital Advisers and Clayton Utz.