NEXION listed in February 2021 with the stated objective to become a global operator of Hybrid Cloud and SD-WAN infrastructure through a combination of acquisitions and organic revenue growth.
The combined un-audited revenue of Aiscorp and Silicon to the end of the NZ financial year 2022 (March 31st, 2022) was AUD $11.71 million and EBITDA was AUD $1.12 million assuming an NZD/AUD exchange rate of 0.90. The terms of the acquisitions are to pay a minimum number of shares calculated at 1.1 times the FY22 revenue divided by 20 cents per NNG share with the vendors able to take up-to 42% of the valuation in cash.
The purchase is subject to conditions including completion of due diligence, NEXION obtaining its board, shareholder, regulator, and third-party approvals and NEXION raising at least $7.425 million cash via debt and/or equity. Settlement occurs when all conditions are satisfied and if the conditions remain unsatisfied after November 30, 2022, then either party may terminate the agreement.
On completion, should the NNG share price be less than 20 cents then an adjusting amount of shares will be issued to account for the valuation short-fall. Performance rights up to an additional 100% of the FY22 revenue divided by 20 cents will be issued to the vendors. They will vest proportionate to the percent the actual revenue achieved in FY23 is of the FY22 revenue. Based on historic performance, a minimum 23% of these rights might vest.
NEXION is in the negotiation with an equity funder to provide up-to $8M in capital at a 5% discount to the then share price (on a 30-day VWAP basis) and is also pursuing investment from existing shareholders. Debt facilities up to $2M are being considered for the second half of FY23, subject to the consolidated Group demonstrating positive cash flow.
Group CEO Paul Glass said “I’m extremely excited to have Aiscorp and Silicon join us on our journey to become a global hybrid cloud operator. Aiscorp and Silicon are outstanding businesses with long histories of delivering services in the Pacific region and will continue to operate as independent, complimentary members of NEXION Group. NEXION has a vision to deliver services in eight global regions and the completion of these acquisitions sets the foundation for our second region called NEXION Pacific that spans the East coast of Australia to the West coast of North America. Our next step is Canada so a base in Wellington makes acquisitions and growth into that time-zone much more efficient.”