Technology company Neoside is to take 70 percent of Tennyson Networks in a $9.8 million deal that will fund Tennysons' SOX business and broadband expansion, pending a shareholder vote in September.
Tennyson had been planning to unload its flagship Smart Office eXchange (SOX) operations and has just bought broadband division Datareach - then known as Ericsson Data Services - for $1.4 million from Ericsson New Zealand.
Neoside, which is controlled by Melbourne accountant John Fletcher and businessman Geoffrey Rubython, had previously been slated as a possible buyer for SOX, but as negotiations proceeded the company decided to take a 70 percent share of Tennyson instead.
"We believe that with this significant capital injection, Tennyson will now be in an excellent position to harness the synergies of the SOX and Datareach businesses and have a strong balance sheet to finance the growth and international expansion of the enlarged group," Tennyson chairman Harvey Parker said.
Shareholders will vote at a September meeting whether to approve the issue of 391.04 million Tennyson shares to Neoside at an issue price of 2.5 cents each. Tennyson had on 17 July issued 8.96 million shares to private investors at that price, raising $224,000.
Fletcher and Rubython will join Tennyson's board of directors. Tennyson's largest shareholder until now, Ron Woss, will retire from the board.
ASX-listed Tennyson Networks made a $4.9 million loss on $2.5 million in revenue in the financial year ending 30 June 2002.