Cabletalk's deal means a change in exchange listing

By ADAM GIFFORD

Shareholders in new capital market-listed Cabletalk Group have approved its key transaction to buy Cabletalk Astute Network Services (CANS) for $15.4 million in cash and shares.

Once the transaction goes through, probably by mid-July, Cabletalk Group will jump to a full Stock Exchange listing because its capitalisation will be over the $10 million limit for NCM companies.

CANS was formed by a share swap between service companies Cabletalk, Astute Networks (NZ), McBreen Jenkins Telecommunications and an associated company, MJCT Communications.

Cabletalk chairman Ross Keenan said more than 70 per cent of CANS' income came from Telecom, and the rest from contracts with other providers.

It holds six of the 36 Telecom "patch" contracts to provide all maintenance, new connections and fault servicing in a geographic area, and one of the four technology area contracts giving responsibility for high level infrastructure.

The other patch contracts are held by GDC Communications, French company Alstrom and engineering firm Downer Group, which bought Telecom's Connectel subsidiary.

The purchase price was negotiated by independent directors Mr Keenan and Sir Selwyn Cushing, based on a PriceWaterhouseCoopers valuation of the merged companies at between $14.2 million and $16 million.

Most of the purchase price, $10.868 million, will come from the issue of new shares at 50c each. The balance, with the issues costs and $1.094 million to finance growth, will come from the issue of 11.6 million 50c shares to existing shareholders, CANS staff and associates, giving a nine-for-one rights issue.

Since listing in December, Cabletalk Group shares have traded for between 60c and $1.68, and last traded at $1.20.

The companies' aggregate earnings of $24.675 million in the year to March 31 last year were boosted to $38.739 million to March this year and a forecast $46 million this financial year as patch contracts were added and income came in from Clear and TelstraSaturn fibre installations.

Chief executive Peter Wilson said the pool of skilled technicians was limited because few had been trained since the sale of Telecom in 1990 and the subsequent move to contracting out. That meant Cabletalk, with its 270 technicians, was in a strong position.