Raisebook

Fast-Growing Australian Telco Acquisition
Freshtel
Freshtel
ASX:FSG

The Acquisition

Freshtel Holdings Limited (FRE) is an ASX-listed shell company which has recently entered into a binding agreement to acquire 100% of Field Solutions Holdings Limited (FSG).

FSG is a licensed, profitable Australian telecommunications carrier and provider of cloud computing infrastructure, applications and services, with a customer base primarily located in regional Australia.

Raise Amount
$3,000,000
Offer Price
$0.0300
Closes
Mar 22, 2017

The company delivers both private and generic cloud-hosting services using its own nationwide IP network. These services include infrastructure as a service, private data networks, and VoIP services.

FSG: Telecommunications & Cloud Services For Australia's Rural Market

  • Founded in 2012, FSG has an extensive track-record of customer growth, with a focus on rural regions. These regions have been overlooked by Australia’s three main telecommunication carriers, and offer high margin returns for the company.
  • Over the 2015 and 2016 financial years, FSG experienced strong revenue growth of approximately 142% and 70% respectively.
  • On completion of the issue (assuming $4 million is raised), the company will have a market capitalisation of $10.9 million, cash reserves of $3.8 million and a forecast net profit in 2017 of $1.49 million.
  • Growth in FSG revenue is expected to continue with greater utilisation of its fibre and wireless telecommunications networks in New South Wales at Coffs Harbour, Gundagai and Moree. FSG is also currently planning more in NSW and also in North Queensland.
  • Fibre networks are business-ready networks, ahead of the National Broadband Network, using symmetrical capacity. This capacity allows FSG to target high-value business users directly and provide a wholesale service to resellers.
  • Customised software development solutions have already been implemented and proven successful for organisations such as Surf Life Saving Australia and the University of Sydney (and corresponding long-term hosting contracts).
  • Other software products developed by FSG to date have been implemented in field-based applications for asset management, service and support, with customers including Hydro Tasmania, Surf Life Saving Australia and Transport for NSW.
  • FSG’s ability to provide both bespoke and off-the-shelf SaaS (software as a service) products, which can then be hosted and delivered on the company’s infrastructure, means very low-cost delivery into a premium price market. Being able to deliver this service in regional Australia primarily for business application, as well as ahead of the competition, gives the company a significant edge in achieving strong continuous growth.

Strong demand expected for this placement

  • FSG currently holds all required Australian government telecommunications licenses – combined with its software development and hosting capacities, this provides a unique opportunity to deliver all necessary elements of the complete cloud technology services business model.
  • Board has proven track-record within the telecommunications, software, and cloud technology markets.
  • Acquisition will enable FRE to tap into the established nature of the FSG business, primarily in regional and rural Australia, the government sector, and its growing presence in the cloud technology market.

The offer

The company is offering up to 133,333,333 shares at an issue price of $0.03 per share to raise up to $4,000,000, with a minimum subscription of $3,000,000.

Cornerstone support of circa $2,000,000 has been secured.

Raisebook has secured a limited placement in this high demand deal.

The opportunity revolves around the oversubscriptions and the introduction of shareholder spread.

This placement is available to all investors, including retail.

Capital structure

Shares Minimum Subscription ($3,000,000) Full Subscription ($4,000,000)
Shares currently on issue 34,460,754 34,460,754
Shares to be issued pursuant to the Offer 100,000,000 133,333,333
Consideration Shares 185,714,286 185,714,286
Director Shares 6,000,000 6,000,000
Facilitator Shares 4,000,000 4,000,000
Total Shares immediately following the Acquisition 330,175,040 363,508,373
Options
Options currently on issue (1) (quoted Options exercisable at $0.0025 on or before 30 September 2020) 121,664,523
Options (quoted Options exercisable at $0.125 on or before 30 September 2020) 2,433,290
Options to be offered under the Offer Nil
Total Options immediately following the Acquisition (2) 2,433,290

Notes

  1. These include the sub-underwriter Options which were approved by Shareholders at the Company’s annual general meeting held on 29 November 2016 and issued on 23 December 2016.

  2. Assumes no further securities are issued prior to completion of the Acquisition other than as set out in the table.

This deal closed on March 22, 2017