Former iiNet exec exit ended CloudCentral takeover

A reverse takeover deal that Australian cloud services provider CloudCentral had struck with publicly listed vineyard ownership company Dromana Estate fell through because former iiNet executive Andrew Milner withdrew from the agreement.

An acquisition agreement between CloudCentral and publicly listed Dromana Estate fell through earlier this year because former iiNet executive Andrew Milner withdrew from the deal, according to the vineyard management company's chairman.

The deal for the Australian Securities Exchange (ASX)-listed winemaking and vineyard ownership company to acquire the Canberra-based cloud services and products provider was initially announced in March.

The agreement would have seen CloudCentral list publicly on the ASX in a reverse-takeover manoeuvre.

In early April, Dromana Estate announced that it had completed its due diligence of CloudCentral, and, by the end of April, it announced that Melbourne-based technology investment group Dominet Digital would "cornerstone" its acquisition of CloudCentral.

However, in July, Dromana Estate told its shareholders that the agreement had been scrapped, saying in a statement (PDF) that it had terminated its agreement to acquire CloudCentral.

"Dromana would like to wish CloudCentral the best with its endeavours to continue to grow its business," it said at the time.

This week, Dromana Estate's chairman Gabriel Chiappini revealed that the decision to terminate the agreement so abruptly was due to certain conditions not being met — chiefly, that Milner, a former iiNet director, and another executive appointee stipulated by the deal's capital raising lead manager Hartleys, had withdrawn their Leader Manager Mandate.

"Unfortunately, due to circumstances beyond Dromana's control, the Hartleys Nominee director (Andrew Milner) and the executive that Hartleys put forward as a condition to their AU$3.5 million capital raising mandate, withdrew their Leader Manager Mandate and Dromana was unable to complete its acquisition of CloudCentral," said Chiappini in the company's annual report (PDF), published on September 30.

In May, Milner took a position as co-founder and non-executive director of Perth-based marketing and sales solutions firm Roobix. He has also been a non-executive chairman of gaming technology solutions provider Alcotrack since late last year.

A spokesperson for CloudCentral said that the termination of the agreement with Dromana Estate was amicable, and that the company has not ruled out the possibility of a future offering on the ASX.

Dromana Estate, which this week reported a full-year loss of AU$871,061 for the financial year ending 2014, told shareholders that it is working with CloudCentral to "secure repayment of the loan funds advanced".

The company said it had racked up AU$97,524 in acquisition costs relating to the CloudCentral deal.

Dromana Estate said it also advanced AU$163,223 to CloudCentral in accordance with the binding terms sheet, which is now repayable, at the earliest, six months from the deal's termination, or the date that CloudCentral completes its next capital raising.

The fallout of the proposed reverse takeover follows a number of successful back-door entries to the ASX by local technology companies, many of which have targeted struggling publicly listed mining companies to reach their goal.

In October last year, Bulletproof announced that it was conducting a reverse takeover of Spencer Resources Limited.

In July, international prepaid travel SIM provider AussieSim began trading on the ASX as ZipTel after completing the reverse takeover of sports merchandise company Skywards.

Meanwhile, Australian software security startup Cocoon Data is readying to list on the ASX as Covata Limited later this year, after entering an AU$57 million binding agreement to merge with mining company Prime Minerals.

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