LogiCamms On the Verge Of Completion Of Due Diligence For Proposed Merger With OSD Pty Limited

LogiCamms On the Verge Of Completion Of Due Diligence For Proposed Merger With OSD Pty Limited

LogiCamms Limited (ASX: LCM) is under industrial sector and is engaged into providing of project management, multidiscipline engineering, and asset management services to the hydrocarbon, mining and mineral, infrastructure and specialist industries. The company was listed on ASX in 2007 under the capital goods category, and the headquarter of the company is situated in Mary Street, Brisbane, Australia.

The Board of the company announced today on 4 March 2019, that it has signed an indicative, non-binding Term Sheet. It is almost near to the completion of due diligence in relation to a proposed merger of LogiCamms and OSD Pty Limited, a privately-owned engineering, operations and commercial services business with principal operations in Australia and New Zealand. The merger is however subject to the completion of due diligence and execution of a binding Share Sale and Purchase Agreement, and the approval of the shareholders of LogiCamms is required.

The company has also come up with its H1FY19 earnings update. On the financial front, the revenue stood at $41.0 million and EBITDAI of $1.0 million for the six months to December 2018. The net loss after tax of the company was reported at $8.6 million and this included a non-cash impairment charge of $8.0 million. While project gross margins and staff utilisation for the reporting period were both ahead of budget assumptions, revenue was impacted by lower than expected sales volumes.

The Directors decided to write down the value of goodwill by $8.0 million after considering several factors which include the recent financial performance of the group, market capitalisation relative to net assets and the implied value of the proposed merger. The net asset value of the company stood at a level approximating its market value due to the write-down of the goodwill.

The company shows optimism in its outlook for the remainder of the financial year, however, remains cautious as well. In January 2019, the business has experienced an uplift in backlog and pipeline. It started several new projects and an increase in customer tendering activity. Work in hand for the company on a standalone basis stood at $34.3 million at 31 January 2019, up from $30.8 million at 30 June 2018 and $26.8 million at the end of December 2018. However, given the proposed merger would materially impact FY19 revenue and EBITDA, the company has not updated about any guidance. The Board will reassess this position once the outcome of the merger proposal is confirmed.

Chairman of the company, Peter Watson has confirmed that he intends to retire from the Board of the company, and he will not stand for re-election at the next AGM. The timing of his retirement is contingent upon either approval of the shareholders of the proposed merger or execution of the company’s refinancing strategy.

On the price-performance front, the stock of LogiCamms Limited last traded at $0.145 with a market capitalisation of $11.94 million. The stock has generated a YTD return of 20.83% and posted returns of -27.50%, 7.41% and 3.57% over the last six months, three months and one-month period respectively. It has a 52-week high price of $0.305 with an average trading volume of ~43,666.


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