CSG snaps up Commander contracts

Listed IT services company CSG has snapped up the Infrastructure managed services arm of Commander via an agreement with the collapsed company's receivers, McGrathNicol.

Listed IT services company CSG has snapped up the Infrastructure managed services arm of Commander via an agreement with the collapsed company's receivers, McGrathNicol.

The ASX-listed Commander collapsed in August, with $300 million of debts on its books. Receiver McGrathNicol decided to split the company in two — offering Commander's recurring revenue-generating managed services arm separately to its far less profitable hardware, telecoms and IPEX business divisions.

Under the deal, the financial terms of which were undisclosed, CSG will gain access to the $60 million of managed services contracts Commander's Volante arm held prior to its collapse. These include deals with seven federal government agencies.

Commander holds a $23 million managed services deal with Victoria's Department of Education and Early Childhood Development, plus several deals with the Federal Department of Finance and Deregulation, the last signed being a $3.8 million deal awarded in late July, one week prior to the appointment of administrators.

Commander also has contracts with the Federal Department of Agriculture, Fisheries and Forestry, as well as a place on a panel providing IT services to the South Australian Government.

CSG CEO Denis Mackenzie said the deal "doubles the size" of the company's existing managed services business and "catapults CSG into the Canberra and South Australian Government markets".

CSG acknowledged that many of these customers are due to reconsider their contracts around June 2009. The company will have little more than eight months to convince these government customers not to look elsewhere.

"While [renewing these contracts] is not guaranteed, the risk to CSG is low given the accelerated cash return of the upfront purchase price," he said in an ASX statement.

Darwin-based CSG said it would take on 220 Commander staff as part of the acquisition.

The acquisition is the second this month for CSG, after its buy of Oracle ISV CingleVue earlier this month.

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