Billionaire Dermot Desmond will charge Datalex a 10 per cent annual rate of interest for a €6.14 million loan he is set to give the troubled Dublin-listed software firm as part of a funding package to shore up its finances.
Datalex confirmed on Thursday that Mr Desmond’s investment vehicle, IIU, which already owns 26.4 per cent of the company, has bought €3.86 million of new shares in the business at €1 each. That brings his holding to 29.9 per cent, the maximum level an investor can take in an Irish-quoted company before triggering a mandatory takeover offer.
The €6.14 million IIU loan, which is subject to the approval of Datalex shareholders, will have a term of 18 months, the company said, with interest compounding monthly and being rolled up until the facility matures. It will be secured by a fixed and floating charge over group assets.
"The equity investment and loan facility being provided by Mr Desmond at this time is a very welcome development for Datalex," said Datalex chairman Paschal Taggart.
“This strong support from our largest shareholder gives us valuable additional financial flexibility as we move towards realising significant platform revenues that flow from go-live deployments with key customers.”
Shares in Datalex – which fell by as much as 75 per cent since the company issued a profit warning in January – have rallied by up to 37 per cent to 96 cent since news first emerged on Tuesday that Mr Desmond was lining up a €10 million funding line for the group. The €1 price of the placing represents an almost 43 per cent premium to where the stock closed on Monday.
Loss
The company, which provides retail software solutions to the travel industry, warned on January 15th that 2018 earnings before interest, tax, depreciation and amortisation may come to a loss of almost $4 million (€3.5 million). The market had been expecting a profit of about $16 million.
Datalex has been struggling to recover higher-than-expected costs from its largest project, known to be the overhaul of the digital commerce offering of German airline Lufthansa, as it was dogged by budget and timeline overruns.
The group also disclosed on the day of the profit warning that it may have misstated revenues and earnings for the first half of 2018, mainly due to how it booked income associated with the same project.
Shareholders will be asked to approve the loan element of the IIU funding package in late April.
There had been growing concerns in the market in recent times about the group’s cash position, which stood at $8.8 million at the end of December, having fallen by almost half within 12 months.
