AD1’s Acquisition Of USS & Placement For Meeting Short Term Financing Needs

On 3 January 2019, ApplyDirect Limited (ASX:AD1) has announced that there was the signing of transaction documents for the proposed acquisition of Utility Software Services Pty Ltd (USS). USS is a SaaS platform provider with particular expertise in the retail energy market. It also offers specialized consulting and Business Process Outsourcing services to this market. Â

Further, the share sale agreement provides for USS to be acquired for $3.588 million (with $850,000 in retained cash) in an all-scrip offer. This will comprise the issue of approximately 132.9 million new ApplyDirect shares. The Acquisition is subject to the consent by the company's shareholders. Moreover, the Acquisition is expected to provide numerous benefits to the company, including adding a significant revenue stream and providing important access to cost savings and synergies, both of which should accelerate the path to breakeven. In view of the recent positive developments for the company, the directors have considered it an appropriate time to undertake a further infusion via placement for general working capital purposes. As such, the company has announced that it has received firm commitments to raise approximately $1.0 million via the issue of 35.74 million fully paid ordinary shares in the Company. The implementation of the Proposed Acquisition is conditional on:

•        An independent expert's report concluding that the Acquisition is ' fair and reasonable to', 'not fair but reasonable to' or 'in the best interests of' ApplyDirect's non-associated shareholders;

•        The company holding an extraordinary general meeting and its shareholders approving the Acquisition;

•        Any other third party or regulatory approvals or consents (including from ASX and ASIC) required or desired to be obtained in connection with the Acquisition are obtained on terms satisfactory to the company; and

•        There is no material breach of warranty and no material adverse change to the business of USS or any part of the business of USS prior to completion of the Acquisition.

The shareholders of USS will be issued the such number of company's shares as is equal to approximately 35% of the enlarged ApplyDirect.

Like ApplyDirect, USS is a SaaS platform provider, with similar people and technology infrastructure. The Acquisition will provide ApplyDirect with the important technical capability to support the extension of its SaaS platform technology and digital services to large ecosystems. More specifically, the Acquisition is underpinned by a compelling rationale that enables the company to:

•        access important cost savings and synergies that should reduce its drain on working capital;

•        accelerate execution of its technology roadmap, particularly the ‘employment ecosystems’ required for its Institutional Corporate customers;

•        focus its resources on high yielding revenue, pruning the customer base where it necessary to achieve this outcome;

•        incorporate a significant and diversified annual revenue stream of ~$4 million; and

•        accelerate the pathway to breakeven

The Company has also obtained firm commitments for approximately $1.0 million capital raising by way of issuing of new fully paid ordinary shares in the Company to Michael Norster who is the director of the company and his associates.

Proceeds from the Placement will mainly be used for general working capital requirements.

Meanwhile, the stock price of the company has fallen by 35.14 percent in the past six months as on 31 December 2019. AD1’s shares traded at $0.026 with the market capitalization of circa $6.15 million as on 3 January 2019. (AEST 4:00 PM).

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