News blog
Bond International Software
- BY: Andrew Hore |
- POSTED: 21/10/2010 |
TSX-listed Constellation Software Inc is helping recruitment software provider Bond International Software to finance the acquisition of US-based staffing software supplier VCG.
Bond is raising £6.17m gross from the issue of ordinary and non-voting convertible shares. Constellation, which owns 13% of Bond, is subscribing for all of these shares. This will give Constellation 24% of the ordinary share capital. The convertibles can only by converted if the resulting ordinary share stake does not go above 24% - or 29.9% after 20 October 2015. If Constellation retains a stake of at least 20% it has the right to appoint a director.
The acquisition deal is structured so that VCG merges with Bond’s US subsidiary. VCG is valued at $1.09m – with $500,000 held in escrow - but Bond will also pay $7.26m to promissory note holders and contribute $649,000 to VCG to enable it to pay off other note holders. These are estimated amounts and may be adjusted for working capital. The total is $9m (£5.7m) so the proceeds from the fundraising will cover this.
VCG supplies staffing software to a number of sectors in the US, particularly light industrial, commercial, executive search and direct hire. The software includes three legacy products so there may be scope to sell these clients more modern software.
VCG generated $6.79m in revenues in 2009 and that included $5.67m of recurring revenues. The pre-tax profit was $374,000.
In the six months to June 2010, Bond swung from a profit of £799,000 to a loss of £680,000. Revenues fell 11% to £15.1m.
Trading is improving in the second half and there are signs of recovery in staffing software, which has been hit by difficult trading conditions. Some customers that have postponed buying decisions appear nearer to making a decision.
The poor interim trading has hit the Bond share price, which had previously been boosted by share buying by Constellation. At 64.5p a share, up 11p, Bond is valued at £21.3m.
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