PowerTel gets second tranche of iiNet on the cheap

Stuart Corner
Wednesday, 23 August 2006 07:42

IT Industry - Strategy

iiNet has agreed to issue 3,763,986 shares to PowerTel at 69.6 cents being the balance of shares representing in total 14.9 percent stake it had agreed to take in May, at 85 cents each.
Under the May agreement the second tranche placement was conditional on a number of conditions being met, in particular, the price of iiNet shares not falling below 75 cents. That condition has not been met, but, according to iiNet, "the parties have nonetheless agreed to proceed with the placement at a price which more reflects recent trading history."

PowerTel took the stake in iiNet after the company admitted to poor financial forecasting and flawed book-keeping  and said its EBITDA for the year to 30 June 2006 would be well below guidance, given in March, of $40.1 m.

Under that deal PowerTel gained exclusive wholesale access to iiNet's DSLAM network effectively giving both companies access to DSLAMs in 262 exchanges, which they claimed to be the second largest network in the country.

iiNet said today that, based on unaudited accounts to June 30, the company had achieved the revised EBITDA guidance of $24.6M provided to the market in May. It expects to release its year end results in September.