GeoOp shareholders approve merger with InterfaceIT, vote in Sharp as directer
By Jonathan Underhill
May 5 (BusinessDesk) - GeoOp shareholders have overwhelmingly approved a merger with Australian mobile sales app developer InterfaceIT and welcomed Roger Sharp to the board, where he is to replace Mark Weldon as chairman.
Reporters were barred without explanation from the special meeting in Auckland today, which came a day after Weldon's surprise resignation under intense media gaze as chief executive of MediaWorks.
Some 91.74 percent of votes cast were in favour of the transaction, which will see a workforce management app developer GeoOp buy InterfaceIT for $9 million in shares and convertible notes. Independent adviser Simmons Corporate Finance valued InterfaceIT at between $6.1 million and $8.5 million and added an additional $2.3 million to $4 million of benefits arising from a merger.
Shareholders also cast 91.73 percent of votes in favour of issuing 15 million shares at 40 cents apiece and 3 million unlisted convertible notes at a face value of $1 each to the vendors of InterfaceIT to finance the transaction.
The purchase price may increase based on the performance of the merged entity over the 12 months following completion. The vendors will initially own about 32 percent of the enlarged business and their stake could rise to as much as 64 percent if certain conditions, in what the independent adviser called a worst-case scenario for GeoOp shareholders.
Simmons Corporate said in its report that GeoOp would have needed to raise new capital in the near future at its current spending rate if the deal didn't proceed. GeoOp's cash at Dec. 31 was $2.7 million, up from $1.47 million at June 30, reflecting a $2.45 million capital raising and $628,000 share purchase plan. Its monthly cash burn averaged $325,000 in the first half.
InterfaceIT is a joint venture between entrepreneur Jordan Muir and merchant bank North Ridge Partners, which as part of the deal will be given a mandate to advise on a potential capital raising, which would coincide with or precede a listing on the ASX. The Australian company provides cloud-based programmes for managing in-field, face-to-face sales teams. Its customers include Trustpower, Australia's Simply Energy, Aussie Farmers Direct and Telstra, and SunRun in the US.
Some 91.73 percent of votes cast were in favour of appointing InterfaceIT's Sharp to the board. Weldon was to stay on as a director after being replaced as chair.
On a pro-forma basis, GeoOp and InterfaceIT would have reported a loss of $4.2 million loss in the first half on revenue of $4.3 million, GeoOp has said previously. The companies have agreed to continue a cost reduction plan within the first 12 months of the two entities being operationally combined.
GeoOp said the combined entity is expected to reach break-even in the second half of 2017, with a significantly reduced cash outflow over 2016 and the first half of 2017.
GeoOp's NZAX-listed shares last traded at 28 cents and have tumbled 45 percent in the past 12 months.