Co-Investor refinances marketing company
Jul 01 2009 - Australian Venture Capital Journal
Co-Investor Capital Partners has re-financed the debt of marketing and communications company CommQuest Limited (ASX: CQU) and injected new working capital into the business. As a result of the $13 million deal, all of the company’s debt previously provided by Australia and New Zealand Banking Group has been refinanced with the total secured principal debt reduced to $13 million.
Co-Investor managing director Roger Sharp has been appointed executive chairman of CommQuest, replacing former chairman Tom O’Brien who has become a nonexecutive director. CommQuest founder William Scott will remain chief executive for up to six months as the company is stabilized and will then consult as needed.
Mr Scott said the company’s staff had worked hard to transform CommQuest into a sustainable business with debt levels better suited to a tight economic environment. He said he looked forward to Co-Investor’s involvement helping the company move back into profitability with a streamlined group of assets. “I am pleased that CommQuest has survived a very difficult four months of restructuring. As a relatively small, newly listed communications group, we were hard hit in some divisions by the change in market in November last year.
The company needed to make major changes to its operating structure in order to accommodate a radically different environment. Mr Sharp said he believed the core businesses within CommQuest had significant potential and their strength had been reflected in the continued loyalty and support shown by customers.
Prior to Co-Investor’s refinancing, the company was already involved in asset divestment and restructuring in response to the claims of creditors. These included sales of its integrated marketing services division businesses, Boiler Room Group, Bland Consulting Pty Ltd and Point9 Pty Ltd and SMART PR Corporation Pty Ltd. The two businesses were each the subject of management buyouts.
CommQuest is also to sell its 20 per cent stake in Platinum TV Pty Ltd to that company’s other shareholders. CommQuest has closed down underperforming businesses Mobidata Group – mobile products – and Think Creative Management Pty Ltd – events management.
Co-Investor is jointly owned by its senior management team and the Victor Smorgon Group of Melbourne. Co-Investor’s investment model differs from that of private equity funds managers in several respects. Co-Investor focuses on the small cap listed company space. It does not seek controlling interests, generally taking stakes of less than 20 per cent. It offers extensive financial management assistance to executive teams but does not seek to maintain its investment for as long as private equity firms. As a consequence of its high level of involvement, Co- Investor seeks to invest in only a small number of businesses, generally no more than about four at a time.