Pracom to sell assets to Service Stream

Stan Beer
Friday, 21 January 2005 19:00

IT Industry - Development

Telecommunications services provider, Pracom Limited (ASX : PCO) announced has entered into an agreement for the sale of its business assets with business services outsourcer Service Stream Limited (ASX : STR).

As stated in its market release, the need to recapitalise Pracom has been well documented and has been based on a perilously weak balance sheet (net assets of negative $6.3m as at 30 June 2004).

The agreement means all of the operating undertakings of the company will be sold
for a cash payment of $7m and a minimum payment of $1.5m to Pracom. On completion, Service Stream will assume responsibility for all staff and their entitlements valued at $2.5m, and replace working capital for the ongoing operations of the Pracom businesses. Core to the transaction is that all current Pracom employees will be offered identical roles within the Service Stream Group, on the same terms and conditions including protection of entitlements and length of service.

After the transaction, which due to go up for shareholder approval in February, the current Pracom Group will change its name, the current board will remain and shareholders will retain ultimate ownership of a publicly listed entity with a cash balance, franking credits and a spread of shareholders.