Rocom offers 1.2m shares

By FIONA ROTHERHAM

Telco equipment supplier Rocom is offering 1.2 million 50c shares to the public in the fourth listing on the Stock Exchange's New Capital Market.

Rocom Wireless is a shell company, as required under the market's rule, that has identified the purchase of all the shares in Rocom as a potential key transaction.

Rocom is New Zealand's largest independent cellular and satellite telecommunications equipment dealer, with 60,000 customers and annual revenue of $16 million.

Founders Richard Guy and Paul Van Dorp bought it from Singapore's Acma in 1997. Last year, the company took on a $2 million bank loan to allow Mr Guy to buy out his partner.

The prospectus said this loan would be significantly reduced, if not repaid, from the money raised through the key transaction, leaving the company with no operating debt.

Mr Guy also wants to raise funds for expansion to take advantage of growth in the new generation of mobile phones using wireless application protocol.

A total of $800,000 will be raised from the initial listing - $600,000 from the public and $200,000 from the firm's four directors. The directors include Rocom managing director Stephen Borich, who will hold 22 per cent of the shell company's capital, Mr Guy, financial consultant Stephen Tietjen and accountant Donald Scott, who will all hold 6 per cent.

If the key transaction goes as planned, one of Mr Guy's family trusts will own just over 50 per cent of the new company.

Valuations of Rocom range between $5.8 million and $7 million. Mr Guy said it was likely further shares would have to be issued to raise a further $2 million for the key transaction.

The Rocom purchase is expected to go ahead within four weeks. This would lift Rocom's market capitalisation to just under $10 million - the threshold at which the company would be required to shift on to the exchange's main board.

Another new market firm, e-Opportunity, will switch to the main board on August 10 following completion of its key transaction. It will then be renamed Selector Group, the name of the software developer it took over.

It has to list on the main board because its market capitalisation went above the limit. It has an exchange waiver, from having a spread of 500 shareholders on listing.