Australian software and services provider Solution 6 Holdings said today it had reached an in-principle agreement for a management buyout of its IT services division Alphawest 6.
Alphawest 6 has been purchased for $18 million in a management buyout, led by managing director Garry Henley.
At the same time the company said that it expects to writedown the IT services division by about $30 million.
The management of Alphawest 6 had been in due diligence on the deal with the parent company for several weeks. Since the start of the year, Solution 6 had been considering selling off the IT services division, and had originally hoped to sell the business by the end of June to clear its balance sheet before the new financial year.
The Alphawest 6 business employs 470 staff across the country, providing IT infrastructure, managed services, consulting, training and recruitment. Vendor partners include the likes of Cisco, Microsoft, Compaq, Check Point, Citrix, Hummingbird and Tower Software.
Solution 6 intends to now focus entirely on its professional software businesses, which in the company's last half-yearly results were much more profitable. It earned the company EBITDA profits of $8.5 million on $78.1 million in revenue, while the IT services business posted an EBITDA loss of $3.3 million on similar revenues ($71 million).
"I am delighted that the management of Alphawest will now take direct ownership of its business," Solution 6 CEO Neil Gamble said. "Alphawest staff, customers and suppliers will benefit from management continuity and minimum disruption to the business."
The $18 million figure is subject to a net asset adjustment once the divestment is complete. This is expected to happen by the end of the month.