LongReach sells ServicePoint for $9M

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LongReach sells ServicePoint for $9M

ASX-listed services provider, LongReach Group has agreed to sell its ServicePoint business for $9 million to management consulting and systems integration company, The Citadel Group.

The cash deal is subject to working capital adjustments at completion and shareholder approval.

ServicePoint is a specialist provider of secure and non-secure video conferencing systems and related to management services, primarily to federal and state government departments throughout Australia.

In a letter to shareholders, LongReach reported the $9 million offer was raised during review of its business in May 2007. It has also appointed Grant Thornton to head up the review.

The announcement of the sale came just as Longreach announced a non-renounceable Rights Issue. The Rights Issue seeks to raise about $1.8 million.

According to a statement to the ASX “the purpose of the Rights Issue is to provide LongReach with capital to fund its existing operations including working capital requirements arising from significant contracts that have been awarded to both of its operating subsidiaries, ServicePoint and C4i”.

The Rights Issue will be offered to shareholders, regardless of their approval of the sale of ServicePoint, LongReach stated to the ASX.
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