- Orcoda Limited (ASX:ODA) has entered into a Share Purchase Agreement to purchase 100% of the shares in Betta Group of Companies Qld Pty Ltd (BGC).
- The total consideration for the transaction is expected to be $5 million, to be paid as a combination of securities and cash.
- The BGC founder will work in Orcoda as Managing Director of the new underlying Orcoda Betta business unit post-transaction for at least 18 months.
Leading Australian transport logistics and transport services solution provider Orcoda Limited (ASX:ODA) will acquire transport services business Betta Group. A notable milestone, Managing Director Geoff Jamieson regards the deal to be “a perfect fit” into the Company’s Resource Logistics division.
Acquisition of Betta Group
Orcoda has entered into a Share Purchase Agreement to purchase 100% of the shares in Betta Group of Companies Qld Pty Ltd. The deal seems to be timed well, as there are several major infrastructure projects coming up in road, rail and air in Central Queensland. A combined Orcoda/Betta business could be well positioned to win a lot of these contracts.
Betta Group founder and Managing Director Geoff Williams informs that majority of Betta’s contracts are remote. He further believes that Betta may benefit from Orcoda’s software, contracting and management expertise in managing its workforce and assets (vehicles, plant and equipment).
“The joining of our businesses will add significant value and efficiency to the business and enhance its profitability”, Mr Williams states.
Read about Orcoda’s Long-Term Victorian State Government Project HERE !
Terms Of Acquisition
The total consideration for the transaction is likely to be $5 million, to be paid as a combination of securities and cash-
Orcoda intends to issue the Consideration Shares within its current available placement capacity. They will be issued at a deemed $0.16 per ODA ordinary share. The total number of Consideration Shares is expected to be 15,625,000 ODA ordinary shares.
Besides, the Cash Consideration payable at completion will be funded from existing cash reserves. After completing the transaction, BGC shareholders will hold ~12% of the ordinary shares in Orcoda via the issue of the Consideration Shares.
Breaking Down Terms Of Acquisition
- The Consideration Cash earn-out period of 18 months is divided into three 6-month periods. They begin from 1 January 2021 whereby $800k to $1 million in EBITDA contribution is essential to be made by the BGC business unit in each of the 6-month periods.
- If the EBITDA is below $800k, then no earn-out cash is payable. However, if EBITDA is $800k then 80% of the earn-out cash is paid ($400k in this example). Then, it will be paid in increments up to 100% if $1 million EBITDA is achieved to satisfy the earn-out cash necessities.
BGC Founder to Work in Orcoda
Orcoda informed that as per the transaction, the BGC founder (Geoff Williams) will work in Orcoda as managing director of the new underlying Orcoda Betta business unit post the transaction for a minimum period of 18 months after settlement of the Transaction. Besides, Mr Williams will also join the Orcoda Board of Directors.
Orcoda shares quoted $0.17 on 30 November 2020.