IT managed services supplier Nexus Management is selling two-thirds of its stake in US technology retailer PD Financial and nearly doubled its investment in the process.
Nexus is selling a 16.3% stake in PD back to the company for $5m (£2.5m). Nexus chief executive Roger Richardson was keen to retain a stake in PD and Nexus will still own 8.3%. The whole stake cost just over $4.3m (£2.15m) so Nexus will generate more than that in the disposal and still have shares worth nearly $2m (£1m).
Nexus receives $300,000 (£150,000) upfront and a further $2.7m (£1.35m)by the end of June. The rest is payable before the end of the year. The cash could be paid earlier depending on when PD completes a $65m fundraising.
PD’s credit company announced last year that it was ending its agreement with the company because it is tightening its lending criteria. It comes to an end at the beginning of April but PD believes it will find an alternative by then.
Nexus offered help desk and support packages to PD’s customers. This business generated £700,000 of cash for Nexus in the year to September 2007. Only part of that has been recognised in revenues.
Nexus will report revenues up from £2.6m to £21m in the year to September 2007. All of PD’s revenues are consolidated in that figure because it is classed as an associate – in the first half PD contributed £5.89m in revenues. PD won’t stop being an associate until the $2.7m instalment is paid. That means its revenues will be consolidated for a large part of the current financial year.
Richardson says that there is growth in the core business and its trading has been satisfactory in the first three months of this financial year.
Nexus will have cash in the bank to spend on acquisitions, particularly in the UK. Richardson believes this is a good time to make acquisitions because there is value in the market and people may be more willing to sell.
At 0.95p a share, Nexus is valued at £8m. The full year figures to September 2007 have been delayed because of the PD transaction but they should be released in March.
© 2021 Aim Micro. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.