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Highlights
Cardno Limited has inked a share purchase agreement with DT Global.
The cost of transaction is around AU$56.5 million.
The bulk of the proceeds will be distributed among the shareholders.
Environmental, social and infrastructure company, Cardno Limited’s (ASX:CDD), shares closed 7.213% up on the ASX after the company announced signing a share purchase agreement with DT Global Australia Pty Ltd. DT Global is a subsidiary company of DT Global LP.
Brisbane-based company said that the bulk of proceeds from the transaction will be distributed among the shareholders.
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The financial metrics of the share purchase agreement
Under the share purchase agreement, DT Global will buy 100% share of the Cardno Emerging markets USA Ltd., Cardno UK Limited and Cardno Emerging Markets (Australia) Pty Ltd. The group of three companies is known as the Cardno International Development.
Reportedly, the cost of the transaction is AU$56.5 million. The entities have been sold on a debt-free and cash-free basis. Moreover, the agreement is subject to net debt adjustment and net working capital mechanism.
Image source: © Edhardream | Megapixl.com
Worth mentioning here is that, with the completion of the transaction, the Cardno shareholders will receive around AU$56.5 million, that is AU$1.45 per share. The portion of the sales proceeds will be distributed in the form of unfranked dividends and capital returns. The company aims at distributing proceeds by the end of July 2022, as the expected date for the completion of the transaction is the end of June 2022. The expected characteristic of the distribution is not finalised yet.
The small-cap firm might retain AU$15 million cash after distributing it to the shareholders and paying the transaction costs. The rest of the funds will be used for fulfilling ongoing cash flow requirements.
About the share purchase agreement
The transaction is subject to the shareholder’s approval as per the ASX announcement. At the end of May, an extraordinary general meeting will take place, in which Cardno’s board will vote whether the deal is in the company’s interest or not. One of the largest Cardno shareholders, Crescent Capital Partners, said that it would vote in favour of the agreement. Moreover, Cardno is required to establish information technology systems without the interference of any other company to a specific level.
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Today’s ASX release follows the 15 November 2021 announcement in which Cardno informed that it would conduct a strategic review of its operations to maximise the shareholder’s value.
Post this transaction, Cardno will be left with the Latin American (Entrix) business as it will tail off South American Caminosca operations, expected to be complete by December 2022. This will further generate cash flow; however, the amount is not disclosed yet.
Management commentary
Chairman of Cardno, Michael Alscher, commented on the development:
“The transaction with DT Global not only represents an attractive financial outcome for Cardno shareholders but also ensures DT Global will continue delivering the important work of Cardno International Development, backed by their more than 60 years’ experience in supporting aid and development imperatives glo
