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Key Points
- CloudCoCo Holdings has conditionally agreed to sell its IT managed services business to Aspire Technology Solutions for up to £9.2 million.
- The sale will allow the discharge of all group liabilities and leave CloudCoCo with £950,000 in cash for working capital.
- Following the sale, CloudCoCo will focus on its product reseller business and seek shareholder approval at a General Meeting on 31 October 2024.
CloudCoCo (LSE:CLCO), a prominent UK provider of managed IT services and communication solutions, has announced a significant strategic move. The company revealed that its subsidiary, CloudCoCo Holdings Limited, has entered into a Share Purchase Agreement to conditionally sell the entire issued share capital of its IT managed services business, CloudCoCo Limited, to Aspire Technology Solutions Ltd. This transaction, subject to shareholder approval, is poised to reshape CloudCoCo's future direction.
Key Details of the Proposed Sale
- Transaction Value: The proposed sale involves a gross cash consideration of approximately £9.2 million. After adjustments for a debt-free, cash-free state and normalised working capital, the net cash consideration is expected to be around £7.85 million.
- Liability Discharge: The proceeds from this sale will enable CloudCoCo to discharge all outstanding liabilities, including the MXC Loan Notes, thereby significantly improving its financial standing. Following the sale, the company anticipates retaining approximately £950,000 in cash for working capital purposes.
- Strategic Shift: With the sale of its IT managed services business, CloudCoCo intends to refocus on its product reseller operations. This will primarily be facilitated through its Systems Assurance business-to-business operation located in Sheffield and its e-commerce platform, MoreCoCo. These channels will enable CloudCoCo to deliver enterprise-grade, on-demand IT products and services to a diverse customer base.
- Shareholder Approval: The proposed sale is contingent upon shareholder approval, which will be sought at a General Meeting scheduled for 31 October 2024 at the offices of DAC Beachcroft LLP, located at The Walbrook Building, London EC4N 8AF, at 1:00 p.m.
Financial Performance Overview
In its unaudited financial statements for the fiscal year 2024, CloudCoCo expects to report revenues of at least £27 million, up from £25.9 million in 2023. However, the company is also projecting a net debt of approximately £6.9 million, reflecting a challenging operating environment exacerbated by rising costs.
The proposed sale and subsequent strategic realignment reflect CloudCoCo's commitment to streamlining its operations and focusing on areas of growth within the IT sector.
