By Deepak Sharma, as published on Proactive Investors, November 27, 2020.
The company believes Betta’s ISO qualifications will enhance the newly merged entity’s ability to win new infrastructure projects.
Orcoda Ltd (ASX:ODA) has entered into a share purchase agreement (SPA) to purchase 100% of transport services provider Betta Group for total consideration of $5 million in a combination of securities and cash.
Orcoda is a leading Australian transport logistics and services provider with expertise in business efficiency and optimisation while Betta Group is a long-standing transport services business specialising in rail, road and air infrastructure power services contracting.
Betta also contracts for services in oil & gas and mining projects and its customer base includes Aurizon, Ergon Energy, Queensland Rail, PowerLink, Q-Build, Australian Defence Force and the Bowen Basin mining industry.
The Betta Group achieved $9 million in revenue and EBITDA of $2.1 million in FY2020.
“Perfect fit” for Orcoda
Orcoda managing director Geoff Jamieson said: “Betta Group is a perfect fit into our Resource Logistics division. Our contracting methodologies are the same.
“Once a contract is won, we will both manage the contract utilising our management skills in managing workers, assets and utilise our existing ‘best in class’ software to optimise the project outcomes and deliver better value for our customers.
“Betta’s ISO qualifications will enhance the newly merged entity’s ability to win new infrastructure projects.”
Total consideration for the transaction is expected to be $5 million, paid as a combination of securities and cash.
The consideration cash earn-out period of 18 months is divided into three 6-month periods starting from January 1, 2021, whereby between $800,000 and $1 million in EBITDA contribution is required to be made by the BGC business unit in each of the 6-month periods.
This transaction involves the BGC founder working in Orcoda as managing director of the new underlying Orcoda Betta business unit post-transaction for a minimum of 18 months after settlement of the transaction and also joining the Orcoda board of directors.
Orcoda is intending to issue the consideration shares within its current available placement capacity under the ASX Listing Rule 7.1.
Consideration shares are to be issued at a deemed 16 cent per ODA ordinary share within Orcoda’s capacity, and as a result, the total number of consideration shares is expected to be 15.62 million ODA shares.
Upon completion of the transaction, BGC shareholders will hold around 12% of the ordinary shares in the company.
To benefit from Orcoda software
Betta Group founder and managing director Geoff Williams said: “The majority of Betta’s contracts are remote and will benefit from Orcoda’s software, contracting and management expertise in managing our workforce and our assets (vehicles, plant and equipment).
“The joining of our businesses will add significant value and efficiency to the business and enhance its profitability.
“There are multiple major infrastructure projects coming up in road, rail and air in Central Queensland and a combined Orcoda/Betta business will be well-positioned to win a lot of these contracts.”