Vassallo Group ‘cornerstone investor’ in 6pm rights issue

Vassallo Builders Group has been lined up as the “cornerstone investor” in 6pm Holdings plc’s €3.1 million rights issue by taking up 3.4 million shares at €1 million.

6pm Holdings plc, the parent of Naxxar-based IT solutions company 6pm Ltd and its UK sister 6pm Management Consultancy (UK), is to turn to shareholders to seek fresh capital to contribute to speeding up the group’s growth on Monday.

Details of the rights issue were approved almost unanimously by shareholders at an extraordinary general meeting at the Corinthia San Ġorġ last Saturday.

6pm chief executive officer Ivan Bartolo afterwards explained the rights issue would result in a “transformational change” and could potentially lead to 6pm being 84 per cent Maltese-owned from 50.1 per cent British-owned at the end of last year.

Besides Vassallo Group – the relationship with which Mr Bartolo was confident would result in “business flows in due course” – the 6pm CEO and founder is to take up 1.04 million shares in the rights issue and will acquire 850,000 shares from founder directors Steve Wightman and Alan West Robinson to further increase his stake.

According to the prospectus, €1 million from the issue proceeds will go towards sealing the acquisition of IT infrastructure companies Compunet Operations Ltd and Compunet Agencies Ltd. The deal should be finalised by the end of this month.

Compunet founder Brian Zarb Adami, who is to be appointed 6pm chief technical officer, is to take up 1.04 million shares.

Mr Bartolo, Mr Zarb Adami and Vassallo Group will own nearly 43 per cent of 6pm. Current and new shareholders can take up a maximum 5.3 million shares at a discounted price of 0.25p.

6pm, which until recently traded primarily with the UK market, reports in sterling.

The rights issue, which is underwritten by Mediterranean Bank plc, also seeks to settle a £472,000 bank loan with Banif Bank. The remainder of the net proceeds, of which £425,000 will be placed in reserve, has been earmarked for working capital purposes.

In December, 6pm acquired a 70 per cent stake in software company Softweb, the solutions provider for the accounting, insurance, shipping and HR sectors.

Towards the end of last year, Mr Bartolo outlined 6pm’s planned industry consolidation programme that would involve around 10 firms in 2011. He said the initiative was part of a wider, three-year plan that would see the firm strengthen its offering in the UK, Malta and new markets by 2013.

6pm’s stock has fallen from 0.67p to 0.43p since it became the first Maltese company to list on the Malta Stock Exchange in 2007, mainly due to the lack of growth potential.

Mr Bartolo, who gave shareholders an overview of the last three years on Saturday, admitted afterwards: “6pm was not fully prepared for life as a public company.

“For long periods we did not have a proper chief financial officer. Owning the property used as our office was not a wise decision. 6pm was badly hit by the uncertainty created in the run-up to the 2010 UK election as budgets in the health sector were frozen for most of the year. The results of all this was that in 2010 we recorded the first loss in our 10-year history.”

He defended the company’s decision not to pay dividends in the past two years, saying 6pm could have turned to its reserves but decided to be prudent.

“We invested heavily in the development of software products for the NHS since 2008. We were writing and testing software when the market was stagnant. We were right on this strategy. Now that UK government budgets for the NHS have been reinstated, our NHS approved products are finally gaining traction with more hospitals now signing up every month. Deals are finally being announced following successful trials and 6pm products are being rolled out.”

Mr Bartolo added NHS Innovations, the UK health service’s IT agency, had asked 6pm to develop new software and initiatives were in place, putting the group in a position to generate “positive earnings surprises” in the next two years.

The rights issue, he said, will give 6pm the “firepower to face the future challenges”.

6pm now plans to grow Malta-generated revenues substantially in the next three years to reduce its dependency on the UK market. The company is also to tap the opportunities presented by cloud computing in a bid to be among the leaders in the new market. 6 pm is also to focus on winning business from the larger companies within the local community.