Comms Group to acquire the business and assets of TasmaNet in a highly strategic acquisition, adding key network assets, corporate and government customers and delivering significant expected revenue increase to ~$75m pa with expected underlying annualised EBITDA of $9m to $10m
Comms Group Limited has announced it has signed a binding business sale agreement (BSA) to acquire the business and assets of TasmaNet along with select assets of the broader Field Solutions Holdings Group Ltd group of entities (TasmaNet). Concurrently, the Company is raising $7.0m via a placement and underwritten non-renounceable entitlement offer.
Comms Group CEO and Managing Director Peter McGrath said: “This acquisition will be transformational for Comms Group and clearly aligns with our acquisition strategy for expanding our groups domestic service capabilities in addition to increasing our market share into the government and corporate mid-market sectors, adding to our geographical reach and materially improving our financial performance.
We welcome a highly talented TasmaNet team that together with our existing leadership has decades of experience delivering exceptional service to business and corporate customers delivering a range of telecommunications and managed IT services.”
Mr McGrath added that, “Comms Group is delighted to welcome a number of leading institutional funds managers as shareholders following the placement.”
The BSA is subject to limited conditions precedent relating to the receipt of third party consents for the novation of key contracts. Completion is scheduled to occur before the end of May 2025.
Strategic Rationale
TasmaNet presents a transformational opportunity for Comms Group to materially improve scale – both operationally and financially – underpinned by a long-standing track record of service excellence in the Tasmanian market.
Expands scale and existing service capability
• Expands scale in Comms Group’s existing domestic managed IT and Private Cloud services creating greater opportunity to attract larger corporates.
• Adds significant last-mile data services offerings in Tasmania – opens opportunities to expand in mining and aquaculture.
• Provides further expansion across the eastern seaboard (metro & larger regional) beyond existing operations in VIC, NSW and QLD.
• Ability to leverage improved pricing and market capability from key suppliers due to economies of scale of which the benefits are not yet forecasted.
Leading market position in Tasmania with blue-chip customers
• A favoured local provider with deep local knowledge, relationships and contracts; high barriers to entry for new players given niche market.
• Immediate access to new market segments and regions in Tasmania where Comms Group has little current offering in the market.
• 29 cornerstone Tasmanian Government customers underpin deeply rooted market position (equating to approximately 40 per cent of TasmaNet revenue).
• Over 500 corporate customers with 5+ years average tenure of Top 10 customers.
Strong financial profile
• Proforma FY25 forecast revenue of ~$19m, a 34 per cent increase to the mid-point of forecast FY25 Comms Group standalone revenue guidance with 95 per cent+ recurring revenue.
• 50 per cent+ gross margins (accretive to CCG).
• Incremental annualised EBITDA of ~$4m, a 72 per cent increase on mid-point of FY25 forecast Comms Group standalone EBITDA guidance.
Outlook
The acquisition of TasmaNet further reinforces our focus on increasing market share and geographical presence across the corporate and mid-market sector. The addition of providing services to several Tasmanian government departments further expands Comms Group’s reach, providing upside opportunities given the breadth of the combined service offering.
Over time, the Company is optimistic on the ability to leverage this diversified service offering potentially to other states and to win larger corporate customers nationally.
The Company reaffirms its FY25 standalone guidance for revenue of $55m – $57m and EBITDA of US$5m – $6m.
Following the acquisition, we expect combined proforma annualised revenue of ~$75m and annualised underlying EBITDA of ~$9m to $10m for Comms Group.
The Company continues to evaluate potential strategic M&A opportunities, bolstered by the benefits of increased scale.
Capital Raising
Comms Group has also announced an institutional placement and underwritten non-renounceable entitlement offer to raise a total of approximately $7.0m (Equity Raising). The proceeds of the Equity Raising will be used to fund the acquisition and associated costs of the transaction.
The Equity Raising will be conducted at an offer price of $0.050 per new share (Offer Price), which represents a:
• 16.7 per cent discount to the last close price of $0.060;
• 20.2 per cent discount to the 5-day trading VWAP of $0.063; and
• 19.7 per cent discount to the 15-day trading VWAP of $0.062.
The Equity Raising will be conducted via:
• An institutional placement of approximately $4.8m (Placement);
• A non-renounceable entitlement offer of approximately $2.2m (Entitlement Offer) at a ratio of 1 new share for every 9 existing shares held at the record date for the issue, being Wednesday, 21 May 2025 (Record Date)
The Equity Raising will result in the issue of approximately 139.7 million new ordinary shares (New Shares), representing approximately 36 per cent of Comms Group’s existing securities on issue and approximately 26 per cent of Comms Group’s enlarged share capital following completion of the Equity Raising. The New Shares issued under the Equity Raising will rank equally with existing Comms Group’s shares as at their date of issue.
The Entitlement Offer is non-renounceable, and rights (Entitlements) are not transferrable and will not be able to be traded on the ASX or privately. Eligible shareholders who do not take up their Entitlement under the Entitlement Offer in full or part, will not receive any value in respect of those Entitlements not taken up.
Institutional Placement
Comms Group has received firm commitments to raise approximately $4.8m under the Placement via the issue of approximately 96.4 million fully paid ordinary shares. All shares under the Placement will be issued at the same price as the New Shares issued under the Entitlement Offer (i.e. $0.05 per New Share). The Placement is within the Company’s placement capacity under ASX Listing Rules 7.1 and 7.1A. New Shares issued under the Placement will not be entitled to participate in the Entitlement Offer.
Entitlement Offer
In addition to the Placement, Comms Group proposes to undertake a fully underwritten non-renounceable entitlement offer to eligible shareholders, on the basis of one (1) new fully paid ordinary share for every nine (9) existing ordinary shares held, at the same Offer Price as the Placement. New Shares issued pursuant to the Entitlement Offer will rank equally with all shares on issue.
The Entitlement Offer will open at 10:00am (Sydney time) on Thursday, 22 May 2025 and close at 5:00pm (Sydney time) on Monday, 2 June 2025. Eligible shareholders will be those with registered addresses in Australia and New Zealand only on the Record Date of 7:00pm (Sydney time) on Wednesday, 21 May 2025.
Eligible shareholders can choose to take up all, part or none of their Entitlement. Eligible shareholders wishing to participate in the Entitlement Offer should carefully read the Offer Booklet and accompanying personalised Entitlement and Acceptance Form which are expected to be despatched on Thursday, 22 May 2025. Copies of the Offer Booklet will be available on the ASX website (www.asx.com.au) upon the Offer Booklet being despatched.
Debt Facility
Comms Group has signed a $10.7m senior debt facility agreement provided by Regal Funds Management, with $4.0m to fund the acquisition and an additional $6.7m to refinance the existing senior financier (if required).
Key terms are outlined in the Investor Presentation lodged with the ASX today.
Indicative Timetable
The timetable below is indicative and subject to change. The Company reserves the right to alter the dates at its discretion and without prior notice, subject to the ASX Listing Rules and the Corporations Act 2001 (Cth). The quotation of New Shares is subject to confirmation from the ASX. All times below are based on Sydney time.
