SkyNetGlobal seeks $5m for acquisitions

SkyNetGlobal has gone to the sharemarket to ask for between $2 million and $5 million in funding in order to complete two acquisitions.

The ASX-listed “wireless ISP” has released a prospectus offering a minimum of 30,769,230 fully paid ordinary shares at an offer price of 6.5 cents (to raise $2m) and up to a maximum of 76,923,076 fully paid ordinary shares (to raise $5m).

The offer is underwritten for $2 million by Axis Financial Group (Australia) Ltd as financial advisor and underwriter and is scheduled to close on the 21st November, 2003.

The company intends to use the capital to acquire two firms. The first is to Smart Connect (Wholesale) Pty Ltd, a company with exclusive distribution rights to home automation technologies that are already distributed through mass merchants such as Harvey Norman, Dick Smith, Tandy, Powerhouse and Retravision.

This acquisition would give the ASX-listed company a stronger foothold in the home automation market, a space in which it recently launched its “W Home” business.

If the share offer was highly successful (toward the $5m end of the scale), Soon said SkyNetGlobal would also acquire Star-Tech Communications, a reseller that designed, deployed and maintained corporate wireless LANs.

The public share offer comes off 12 months of improving results for SkyNetGlobal.

Soon said that as little as a year ago, the company’s prospects did not look as good.

“After September 11, we learnt that we had been too reliant on the travelling business market,” he said. “We needed to remove our overheads and costs considerably.”

The first step was the sale of the company’s wireless network assets to Telstra.

“We have turned fixed costs into variable costs and increased our margins on wireless products,” Soon said. “We are now a business that is trading well and is expanding into new markets [such as home automation]. We are in very good shape compared to twelve months ago.”

Soon also said it was the right time for tech stocks to begin performing on the stock market.

“After three years [of downturn] I think we are going into a bull market,” he said. “We are very optimistic that the market will continue to improve. Irrespective of whether it improves, I expect our business to be successful.”

After reporting its first profit of $79,000 in 2003 financial year, Soon has predicted a twelve-fold increase to report a $1 million profit in the 2004 financial year.

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