The Age
Ian McIlwraith
April 3, 2012
The Canadian ATM operator DirectCash Payments seems to be betting the farm on its $173 million bid for Australia’s largest operator of ATMs, Customers Ltd.
Customers’ shares soared yesterday to $1.24 after it announced the agreed scheme which, if successful, will see DirectCash pay $1.27 a share for all of Customers.
The deal is, in Insider’s opinion, a risky one for both sides. The Toronto-listed DirectCash still needs to come good with committed financing to cover not just the cost of buying the shares, but absorbing Customers’ existing $37 million of debt.
While it is buying a business that has forecast earnings before interest, tax, depreciation and amortisation of about $37 million this year, and generates a similar amount of revenue to itself, DirectCash had only $100 million of credit lines available on December 31 and less than half that unutilised.
DirectCash has a sharemarket worth about 2.5 times that of Customers, its EBITDA is not a lot greater than that of Customers.
It is no coincidence that both companies market the same brand of Korean-made ATMs, so the Canadians would have a good idea of the earning capacity of the Australian business.
For Customers investors, it is a remarkable turnaround in less than a month since the chairman, Peter Polson, announced the chief executive Tim Wildash’s speedy departure, and his replacement, a day later, by the former AWB executive John Russell.
Polson was the chairman of AWB for two years, so would no doubt be familiar with Russell, although whether he warned him that his gig running a public company might end within a couple of months of getting the job, is unknown.
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