Hey Guys, I just came across this pretty interesting article,...

Hey Guys, I just came across this pretty interesting article, think it might be of interest to PWK holders. Found it on mergermarket.com

18/03/2009 PIPE Networks attractive to telcos looking for fibre and submarine cable assets, CEO says

PIPE Networks attractive to telcos looking for fibre and submarine cable assets, CEO says
mergermarket Story PIPE Networks, the listed Australian telecommunications infrastructure provider, could be attractive to telecommunications companies interested in fibre and submarine cable assets in Australia, chief executive Bevan Slattery said.

When asked whether PIPE could be attractive to submarine cable operators such as private, Singapore-based Pacnet, Slattery said PIPE's cables and fibre networks are independently owned assets and could interest telcos looking for infrastructure assets and an Australian presence. PIPE has a market capitalisation of AUD 163.16m (USD 107.63m).

When asked about PIPE, William Barney, the CEO of Pacnet, said his company is interested to talk to them. However, there seems to be better and cheaper options in Australia, he added. In a previous interview with this news service, Barney had said the company is interested in submarine cable operators, data providers, ISPs and content delivery players in the Asia-Pacific region, highlighting an interest in Australia. Target preference will be given to companies in debt or firms with under-utilised assets, he had said. Previous Pacnet deals were above the USD 100m ballpark.

Slattery said PIPE's competitors include privately-held Australia Japan Cable (AJC), and private Southern Cross Cable, whose majority shareholder is the New Zealand-listed telco Telecom New Zealand.

PIPE's core focus at the moment is the PPC-1 submarine cable linking Australia and the United States via Guam, Slattery said. The company recently secured financing for the project, and the cable is expected to be operational in August. Until then, the company will focus its cash and resources on the project.

Post August, PIPE could consider bolt-on acquisitions, Slattery said. It could look at infrastructure companies that "interconnect" with PIPE's existing assets, such as its metropolitan fibre networks. PIPE has a large metropolitan fibre network on the east coast, and last year, it invested around AUD 4m in Perth and Adelaide, Slattery said. Targets with mobile phone towers and data centres could also interest PIPE. The company would appoint advisors if required for an acquisition, he said.

Slattery declined to say how much could be spent on acquisitions, but said deals could be a mixture of cash or scrip, with larger deals likely to be scrip-based. According to the company's half-year report, it had AUD 13.60m (USD 8.94m) cash as at 31st December 2008. Previous acquisitions totalled more than AUD 2m (USD 1.31m), he said.

PIPE recently announced a share purchase plan inviting existing shareholders to acquire up to AUD 10,000 in ordinary shares. It expects to raise AUD 2-AUD 3m from the issue, Slattery said.

In February, the company raised AUD 9.8m (USD 6.44m) via a new share issue -- 3.5 million shares at AUD 2.80 each – which was jointly managed by ABN AMRO Morgans and Wilson Corporate Finance HTM. Approximately USD 5m from this equity raising will be used to pay a PPC-1 supplier. Equity from the share purchase plan could be used for future projects that have not been determined yet, Slattery said.

For the half year ending December 2008, PIPE recorded revenues up 47% to AUD 23.7m (USD 15.57m) and consolidated profit after tax up 62% to AUD 5.3m (3.48m). The company is anticipating NPAT of AUD 11m (USD 7.22m) for FY 2009, Slattery said.