GDC aiming to rebuild with $3m share offer

By PETER GRIFFIN

Listed technology company GDC Communications aims to raise $3 million on the sharemarket, as it pursues acquisitions to rebuild after losing key Telecom contracts.

But GDC's timing could have been better. Yesterday, it posted a widened loss of $686,000 on reduced revenue of $25.7 million. Operating earnings fell to $1.3 million from $2.2 million in the previous year, when GDC posted a $344,000 loss.

The company's share price yesterday fell 21 per cent to close at 19c, its lowest in over four months.

However, managing director Geoff Lawrie is confident GDC's share offer will be well received. The offer includes oversubscription provisions and will not be underwritten.

A prospectus due next month will offer shareholders four new shares for every five they own, at a discounted price of 10c a share. The offer will be renounceable.

Key directors, including Lawrie, will put in more money so they will still own 18 per cent of the company's shares.

Lawrie said GDC had "transitioned" 300 people out of the business and hired 160 new people, including an entirely new management team, after the loss of GDC's field-service contracts with Telecom.

GDC is banking its future on becoming a supplier of integrated voice and data services such as IP (internet protocol) telephony.

GDC was in acquisition talks with two companies. It is likely to pursue small independent data integration firms to bolster its experience in data networks.

At the end of the June year, Lawrie said GDC had debt of about $4 million and total assets of $20 million.

GDC will continue to face strong competition from its old partner Telecom, which is selling services that rival the GDC products it used to resell.

GDC's business was "scale-dependent", said Lawrie, so it had to grow to justify the investments that had been made.

For investors who had stuck with GDC through the bad times lately, Lawrie promised steady improvement rather than quick riches.

"It's going to be a number of years before we make our takeover offer for Telecom," he said.