Elco Holdings Ltd. (TASE: ELCO) subsidiary Electra Ltd. (TASE: ELTR) has signed a term sheet for a takeover of telecommunication solutions provider Leadcom Integrated Solutions Ltd. (AIM: LEAD) through the issue of 28 million shares to Electra at £0.28 per share for a total of £7.8 million. Electra will pay an additional £0.03 per share if Leadcom posts a net profit of more than $10 million in 2008, a total additional investment of £840,000. If the deal is closed, Electra will own 17.63% of Leadcom.
Elco already owns nearly 12 million Leadcom shares.
Electra will receive a 30-month option to buy an additional 40 million Leadcom shares at £0.40 per share, for a total of ₤16 million. If Electra fully exercises the option, it will hold 34.2% of Leadcom.
If the agreement with Electra is closed and Electra exercises its options in full, Elco will own 40.23% of Leadcom.
Under the term sheet, Leadcom will amend its articles of association to give Elco the right to appoint the majority of Leadcom's directors, provided Elco owns at least 40% of the company.
Leadcom CEO Arik Alcalay said that Electra would give Leadcom strategic and financial backing, and that the capital injection would enable it to capture significant additional opportunities in the Indian market.
Leadcom will publish its financial report for the fourth quarter of 2007 and the year as whole next week. The share rose 3.7% to ₤0.28 in morning trading today, giving a market cap of ₤33 million. Elco rose 2.5% on the TASE by midday and Electra rose 1.7%.
Published by Globes [online], Israel business news - www.globes-online.com - on February 21, 2008
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