Leading essential network services company Service Stream Limited (ASX: SSM) has made an announcement on 2 December 2018 stating that it has successfully completed the acquisition of Comdain Infrastructure Pty Ltd. Following this news, the share price of the company decreased by 0.852 percent as on 2 January 2019.
Comdain Infrastructure is one of the Australia’s leading utility service provider which provides engineering and asset management services to the gas and water utility sectors, and it is expected that its acquisition will provide SSM enhanced revenue diversity across well-known gas and water markets.
The combined business of Comdain Infrastructure and Service Stream Limited will create the opportunity to provide a broader end-to-end asset life-cycle service which will offer extended service capabilities and expand into additional geographies. Comdain Infrastructure is expected to earn a revenue of around $320 million and EBITDA of around $22 million in FY 2019.
Service Stream has acquired Comdain Infrastructure for a purchase price of $161.7M out of which $68.0 million has been paid by issuing 40,189,126 new Service Stream shares to the vendors and the remaining amount was paid in cash. The cash consideration was funded through $60.0 million of a new debt facility, and the balance was paid through the company’s existing cash-on-hand.
Service Stream is also going to increase the size of its bank guarantee, bank overdraft and revolving cash advance facilities with its existing financiers, ANZ and HSBC, to $130.0 million and it has proposed that Comdain Infrastructure will accede to Service Stream’s amended facility agreement with ANZ and HSBC, and grant security to ANZ and HSBC. The company is also going to extend the term of the overall syndicated facility by two years to 30 September 2021.
The company is going to hold an Extraordinary General Meeting (EGM) for its shareholders to gain their approval with regards to taking the financial assistance by Comdain Infrastructure under the amended facility agreement. The EGM is scheduled to happen in March 2019.
Recently on 20 December 2018, Service Stream Limited signed a new three-year agreement with NBN Co for the deployment of nbn™ fibre infrastructure for supporting business services customers. As per the agreement, the company will provide design, construction and installation services to support the ‘on demand’ deployment of broadband infrastructure across selected business locations and multi-dwelling premises within the nbn™ rollout footprint.
As per the Service Stream’s Managing Director Mr. Leigh Mackender, the company is proud to expand its role in supporting NBN Co as they undertake one of the nation’s most significant infrastructure projects. He further added that this agreement provides an opportunity for the company’s business to grow its program of works with NBN Co, and to retain and build upon the business’ design and construction capabilities.
Meanwhile, in the last six months, the share price of the company increased by 17.33 percent as on 31 December 2018. SSM’s shares traded at $1.745 with a market capitalization of circa $635.73 million as on 2 January 2019 (AEST 2:08 PM).