IT solutions and services provider Ness Technologies Ltd. (Nasdaq: NSTC) today announced that it would fund the expansion of its NessPro business line through issuance of long-term debt, rather than a private placement in its NessPro subsidiary, as previously planned. The company said, “Ness will fund this expansion and other planned acquisitions through a $50 million credit facility from commercial banks. Funds advanced from the credit facility will convert automatically to long-term loans, with an interest rate of approximately 7% and a term of up to seven years.”
The results of this policy will be seen in Ness’s net profit for the second quarter of 2007. The company will post earnings per share of $0.11-0.13 instead of its guidance of $0.17-0.19, which was based on an expected capital gain from the investment by a strategic partner in NessPro.
NessPro is a foundation of Ness’s strategy. Ness’s two recent acquisitions - Spain’s Selesta Espana SAU for €10 million and Thai software distributor Advanced Industrial Management Co. for $3.5 million - were made through NessPro. Ness’s software distribution business is quite profitable, and it is naturally trying to expand this business into new regions.
Ness originally planned to sell 25% of NessPro to a strategic partner at a value of $200 million. The company said in its financial report for the first quarter that it would report a capital gain of $0.06 per share on the deal in the second quarter.
Ness Technologies CFO Ofer Segev told “Globes” today, “We decided that since NessPro’s business is currently concentrated in Israel and Spain, and because a large upside is likely in the future, it would be better to hold onto the company rather than sell it.”
Published by Globes [online], Israel business news - www.globes.co.il - on June 25, 2007
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