Troubled vineyard ownership company Dromana Estate has been the target of a reverse takeover by CloudCentral that will see the cloud provider arrive on the Australian Securities Exchange (ASX).
Under the terms of the acquisition, Dromana will acquire all issued capital of CloudCentral in exchange for 275 million shares to CloudCentral shareholders, and an AU$225,000 loan to CloudCentral. Dromana has issued 150 million shares, which are currently trading for a cent on the ASX, and intends to issue a further 80 million shares at half a cent each to raise the AU$400,000 needed to cover the costs of the transaction, and provide working capital to CloudCentral.
The newly merged entity will take on the CloudCentral name, with founder Kristoffer Sheather becoming its new managing director, with former iiNet and L7 director Andrew Milner joining the company as a non-executive director. Current Dromana chairman, Gabriel Chiappini, will stay on as chairman.
“With this listing and access to additional funding CloudCentral is well placed to capitalise on the worldwide cloud computing sector that is growing at 36 percent compounded annual growth rate," said Sheather. "Additionally a listing provides CloudCentral with 'currency' for strategic acquisitions as they present."
In its last set of financial results (PDF), Dromana posted a half-yearly loss until the end of calendar year 2013 of AU$486,384. For the similar period to the end of 2012, the company posted a smaller loss of AU$215,490. During that time, the company's cash reserves have dwindled from around AU$1m down to only AU$93,655.
23.5 million performance rights are intended to be issued as part of the acquistion, with milestones set at hitting revenue of AU$1.5m by the end of 2016, AU$5m by June 2017, as well a further milestone of AU$5m of EDITBDA by June 2017.
CloudCentral currently claims the Australian Department of Finace, Maritime Safety Authority, and Datapod among its 200 customers.
The transaction is expected to be completed by June of this year.
CloudCentral joins fellow cloud provider company Bulletproof, which also took the reverse takeover route to an ASX listing. In October last year, Bulletproof announced that it was conducing a reverse takeover of Spencer Resources Limited.
Bulletproof's reverse takeover lifted the share price of AU$0.045 to the AU$0.39 region where it currently trades.