Powerlan's woes continue

Powerlan's woes continue

Powerlan's plummeting share price has forced the company to call an extraordinary meeting so shareholders can approve the issue of shares to IMX Software, the development company that Powerlan acquired in June last year.

Since the buyout, Powerlan's shares have dropped from 75 cents to just under 8 cents at the end of June. Yesterday, shares in the company were trading at just 4 cents.

This means the share issue that was part of the IMX acquisition will exceed 15 per cent of the issued capital of Powerlan. To add to Powerlan's troubles, IMX's earnings look set to exceed its $2.5 million estimate by between $1.5 and $3.5 million.

Under the terms and conditions of the acquisition, Powerlan must issue shares at a value equivalent to IMX's earnings before interest and tax (EBIT), multiplied by five, minus $10 million.

"At the time when Powerlan purchased IMX, Powerlan shares were trading at approximately $0.75, and with IMX forecasting an EBIT of $2.5 million, it was reasonably expected that this transaction would not exceed the 15 per cent mark," said Powerlan company secretary Perry Giannopoulos in a letter to shareholders.

The company will hold an extraordinary meeting on October 29 to approve the issue of shares to IMX. Exactly how many shares has yet to be determined and is subject to an audit of IMX, according to Powerlan.

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