Bulletproof Networks Pty Ltd today announced its intention to conduct a reverse-takeover of publicly listed Spencer Resources Limited that will see the cloud provider arrive on the Australian Securities Exchange (ASX).
In the transaction that will see Spencer acquire 100 percent of Bulletproof Networks, current Bulletproof shareholders will in turn gain majority ownership of the newly merged entity, with Bulletproof founders Anthony Woodward and Lorenzo Modesto taking on the roles of CEO and COO of the new company, respectively.
The new entity is slated to be named Bulletproof Limited.
Joining the board as chairman will be Stephe Wilks, who was previously chair of Eftel, which was acquired by M2 Telecommunications earlier this year for a value of close to AU$44.1 million, as well as previously serving as COO of Nextgen Networks.
Should the proposed transaction be approved by Spencer shareholders, the new company would then divest itself from mining and exploration operations, and conduct a share offering worth AU$1.6 million.
"It is envisaged that in the first half of 2014, the company will have a single focus and primarily be involved in information technology (IT) infrastructure and the managed cloud computing IT environment," said an announcement by Spencer to the ASX.
The announcement details the revenue of Bulletproof Networks during the financial years of 2011 to 2013. Over that time, the company's revenue has increased from AU$6.29 million in FY2011 to AU$10.13 million in 2012, which increased to AU$14.83 million for this financial year.
During that time, the company's profit rose from AU$1.06 million for FY2011 to AU$1.16 million in 2012, andto come in at AU$2.21 million.
Woodward told ZDNet that the transaction would allow Bulletproof to continue the rate of growth the company has experienced over recent years, while maintaining strategic control over the direction of the company.
"One of the good things that comes with a reverse listing process is a ready-made shareholder base. We don't need to go to the market to build an entire share register, and that normally requires a fairly substantial capital raising as part of that process, and we really didn't feel that our capital requirements justified such a big step," Woodward said.
"Throughout our history, we've been self-funded and cashflow positive, so we don't need to raise very much capital."
The reverse-listing process is not a mechanism to avoid regulatory oversight, he said.
"They are just as stringent; in fact, exactly the same rules get applied as though you had an IPO."
The Bulletproof co-founder said both parties are absolutely confident that the divesting process would succeed and be well ordered, given that it has already been looked at in some detail.
Woodward said that the proposed transaction is the culmination of a process with Spencer that started at the beginning of the year.
"It's not something that you can do in a hurry; there's a fairly lengthy process that you've got to go through to make sure that there are benefits on both sides of the fence," he said.
The transaction is expected to be voted upon by Spencer shareholders and completed before the end of the year.