GDC pays $2.9m for patch work

By ADAM GIFFORD

Listed company GDC Communications has bought the Telecom patch contract business of Dynamic Communications for $2.9 million cash.

Patch contracts involve doing all the line installation and faults work for Telecom within a geographic area.

In the six months to September 30, Dynamic's three contracts for Auckland Central, Horowhenua and Canterbury North generated revenue of more than $7.5 million.

If Telecom approves the transfer of the contracts, GDC will manage seven of the 34 Telecom patches, including South Auckland and Christchurch Central. All seven contracts are for three years from various dates between August 1999 and April 2000. Telecom has the right to extend them a further two years.

GDC will offer jobs to the 130 Dynamic staff employed in the business and will acquire inventory, vehicles and some fixed assets for about $1 million. The balance of the purchase price is goodwill.

GDC said it expected to make substantial savings and efficiencies from sharing facilities and resources across the seven patches.

It said directors were actively looking at other acquisition and expansion opportunities.

This is the first business the company has bought since listing in April.

GDC chairman Stuart Johnstone said the new contracts should add more than $15 million to revenues for the next financial year.

Its forecast for this year was for revenue of about $45 million.

GDC is believed to be doing due diligence on Eagle Technology, the systems integration company founded by the late Trevor Eagle.