Security firm Cocoon Data the latest backdoor tech listing PUBLISHED: 2 hours 21 MINUTES AGO | UPDATE: 2 hours 17 MINUTES AGO
James Hutchinson
Sydney-based security software maker Cocoon Data is set to list on the Australian Securities Exchange in a $57 million reverse take-over of uranium explorers Prime Minerals.
The deal, the latest mining back-door to hit the stock market, will see Prime issue $50 million in company shares at 20c each to acquire Cocoon, which includes TPG Telecom as an investor. A further $7.2 million in shares would also be offered, pending contractual conditions are met.
The purchase price, which equates to an 80 per cent stake in the merged company, is a significant premium on Tuesday’s closing price of 9c per share for Prime.
Executives at Cocoon Data, which makes data encryption software for major companies, will assume control of the merged entity, with Prime’s directors to step down.
Prime Minerals made a loss of $488,000 for the 2013 financial year.
It is the latest in a series of reverse take-overs on the local stock market as small-cap mining companies seek a new life in the booming technology sector.
Last month Helpa Services, the parent company of local social network Spring.Me, moved to list publicly after being acquired by resources firm GRP corporation. A spate of other cloud computing companies have also flocked to the public market as speculative investors increasingly look to the technology sector.
Cocoon Data had been pondering a public listing for several years, with a planned IPO in 2011 scrapped after the company gained security certification from the former Defence Signals Directorate.
Though majority-owned by private individuals, the country’s third largest broadband provider TPG Telecom made a $7.5 million investment in the company last year, gaining a 15 per cent stake.
Cocoon Data has also been tied to negotiations with smartphone maker BlackBerry to provide its encryption software to the Canadian company.
Prime Minerals set to join cyber security industry Wednesday, May 21, 2014 by Proactive Investors
Prime Minerals (ASX:PIM) is trading higher today after last night's announcement that it intends to merge with Cocoon Data.
Cocoon holds various intellectual property interests pertaining to data security software known as “Covata”.
Under the terms of the Agreement, Prime will merge with Cocoon either by making an off-market takeover offer to acquire all of Cocoon’s fully paid ordinary shares; a scheme of arrangement; or a sale of Cocoon’s business and assets to Prime.
The merger process will be more fully documented in a “Merger Implementation Agreement” to be executed between Prime and Cocoon.
Covata’s technology offers a game changing approach to internet and data security – a revolution in the approach to the security ‘plumbing’ of the internet.
It has a significant strategic contract signed in Europe and advanced discussions with other strategic global partners in North America.
The technology has been independently verified through certification from government accreditation bodies in North America and Australia.
Product commercialisation will be achieved through both direct sales and global distribution partners, including system integrators.
As part of the transformation, a new board and management team will be appointed with significant experience in the cyber-security industry.
The management team are focused on extracting revenue growth expected from the recent investment of over $10 million in a new generation Cloud and Platform offering.
In consideration for Cocoon undertaking the Merger, Prime has agreed to pay to the Cocoon shareholders an equivalent sum of $57,221,673, which shall be satisfied through the issue of Prime shares at a deemed issue price of $0.20, post consolidation.
$50,000,000 worth of Prime shares are to be issued upon completion of the Merger.
An additional $7,221,673 worth of Prime Shares will be issued upon satisfaction of certain conditions.
Prime has also agreed to provide to Cocoon a fully secured, interest free loan of $1,500,000 for a term of 12 months, convertible in certain circumstances.
CVT Price at posting:
2.2¢ Sentiment: Buy Disclosure: Held
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