TPG takes reins of Chariot

Stuart Corner
Friday, 23 February 2007 01:07

IT Industry - Deals

TPG Holdings, an established ISP with ADSL2+ infrastructure in more than 150 exchanges is to acquire approximately 70 percent of struggling ISP Chariot (ASX: CTI).

TPG plans to increase it DSLAM rollout to more than 250 exchanges and Chariot says the deal will provide it with potential for good growth and improved margins and create value for existing shareholders.

TPG wil initially acquire 6.6 million Chariot shares at 8.5 cents each ($561,000) and subject to satisfactory due diligence an shareholder approval a further 45 million shares for $3.825 million. Chariot will also issues TPG with a convertible not with a face value of $1,500,000 at 8.5 cents per share. It plans to use the funds raised for working capital and to repay debt.

Chariot says the TPG deal follows several months of intensive negotiations with a number of interested parties and that the Chariot board "unanimously considers this opportunity as a very good outcome for all of Chariot's stakeholders."

Chariot has had a long running and difficult battle with former VoIP partner, Transcom International. Last September it reported an asset write down  of $7.3 million resulting from its failed VoIP joint venture with Transcom International and vowed to hit back at Transcom's $3.2 million legal claim over the business with one of its own for an even higher figure.

A month earlier the company closed nine regional offices  and retrenched 45 staff in a move that it claims is designed to "improve its on-going performance and financial position".

To compound the company's problems, in the same week its managing director, Robert Horlin-Smith resigned  because he was face charges over alleged misconduct while he was secretary of another company before joining Chariot.