Allied puts TUSC up for sale
- 15 August, 2005 11:54
ASX-listed Allied Technologies (ATA) has put its TUSC subsidiary back on the market just 12 months after acquiring the company for $6.7 million.
The decision was taken after ATA received several unsolicited offers for the company, chairman and managing director, Michael Addison, said.
"The [ATA] share price has gone through a significant decline and we have concluded that to pursue our original strategy of growing by acquisition would be very difficult to achieve," he said.
With the share price having more than halved during the past two years, Addison said the interest being shown in TUSC was attractive to the board. If an acceptable concrete offer was received, Addison hoped to complete the sale within the next two months.
However, Addison warned any potential suitors that he thought TUSC was worth a lot more than ATA had paid for it 12 months ago. Some or all of any net sale proceeds will be distributed to shareholders.
Despite putting a freeze on its acquisitions strategy and looking to sell its TUSC business, Addison said ATA had no immediate plans to sell its other subsidiary, ServicePoint.
Audited ATA results for the year to June 30 will be announced on September 13. The group has revised earlier estimates, due partly to additional asset write-downs. It now expects to record losses of between $3.2 million and $3.6 million on revenue of about $34 million.
Addison blamed a tough year for ATA on three factors: problematic contracts; the opening of a professional consulting services division; and fixed overhead costs that were too high.
He said the problematic contracts had now been resolved, the new services division had been closed, and fixed costs had been significantly reduced. The main objective now, Allison said, was to return ATA to profitability.
With the sale of TUSC now a priority, ATA has shelved plans to appoint a new CEO.
Addison only took up the group managing director's role at the start of June after the departure of interim CEO, Danny Sergeant.
He had been put in place when company founder, Ray Doak, left in March.