Pipe Networks raises another $7.6milion

Stuart Corner
Thursday, 01 June 2006 12:43

IT Industry - Strategy

See also:
Pipe calls for international player partners
Pipe gets $10m funding from ANZ
Pipe Networks' $6.5m issue over-subscribed

Dark Fibre and Internet exchange operator, Pipe Networks, has raised $7.6 million through the placement of four million ordinary shares at $1.90 each to institutional and retail investor clients of ABN AMRO Morgans and Wilson HTM.

The additional funds come on top of a $6.5 million rights issue in February and a $10 million loan funding arrangement last month.

Pipe said the funds would "help further position the company strategically to pursue new opportunities to leverage its considerable fibre optic network and Internet peering base with new products and partnerships targeted at driving increased network utilisation and profit margins".

Founding shareholders Bevan Slattery and Stephen Baxter agreed to sell a combined total of two million shares to help increase liquidity. They continue to hold 8.9 million shares each, representing a total of 45.5 percent of the company voting stock.

Managing director Slattery said that, while previous funding sources were sufficient for Pipe's forecast growth path, new opportunities were emerging that, if executed, would offer the company even greater growth beyond the December 2006 completion of the current fibre optic network expansion.

"The board wishes to accelerate these core business opportunities and position the company to take advantage of the company's extensive fibre network to provide innovative products to accelerate additional growth and further improve margins."

Pipe closed a $6.5 million right issue in February that was 45 percent over subscribed shortly before it announced a profit after tax of $702,349 for the half year to December 2005 on revenue of $4.04 million. Then in April it put in place loan funding of up to $10 million from ANZ Bannk.

Last month it issued an expression of interest looking for partners to provide innovative and value adding products and services that could exploit its metro optic fibre networks and Internet peering exchanges. However it indicated that it would not be willing to provide significant funding for any joint projects.

Pipe is forecasting NPAT for the year to 30 June 2006 of $2.0m - $2.2m.