Vocus to keep NZ business as bids fall short of expectations

Tuesday 24th April 2018

ASX-listed Vocus Group will hold on to its New Zealand businesses including CallPlus, 2talk, Orcon, Slingshot, Flip, and local fibre line provider previously called FX Networks, saying it didn't get any offers attractive enough to entice a sale.

The Melbourne-based company put the New Zealand business on the block last October with a view to selling it by June 2018 to help repay debt taken on during a period of rapid expansion. Today it said it's ended all discussions with interested parties because none made an offer reflecting the assets' value or provided enough certainty of funding and execution.

"Vocus NZ is an excellent business with strong leadership, an attractive growth profile, a clear competitive position and a track record of delivering solid returns on capital," chair Bob Mansfield said in a statement. "The board intends to continue to invest in and grow Vocus NZ to enable that business to realise its strategic potential for shareholders."

The New Zealand division grabbed market share in the hotly contested domestic broadband space in the final six months of 2017, helping boost first-half revenue 4.1 percent to $182.6 million.

Vocus built up the New Zealand business after merging with rival M2 Group in 2016, and later diversified into electricity with retailer Switch Utilities, which has attracted 12,749 customers.

Separately, Vocus said its lending syndicate has agreed to loosen an earnings ratio covenant until the end of the calendar year, and that the company is finalising its appointment of several banks to lead a full refinancing of its debt facilities. The board said it's comfortable with the company's balance sheet and has no plans to raise capital through an equity offer.

Vocus shares last traded at A$2.24 on the ASX and have dropped 26 percent so far this year.

(BusinessDesk)

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