Datalex, the retail software provider for airlines, said on Wednesday that it plans to delist from the Irish stock market after 25 years and raise €6 million of needed funds by way of debt, following a sustained period of stock price malaise.
The company did not say where it would secure the €6 million from. However, it is understood that discussions are ongoing with a number of potential parties. The aim is to secure a deal by the end of August.
Datalex’s main shareholder, Dermot Desmond, had agreed earlier this year to provide another backstop loan if it failed to raise €5 million in fresh equity to grow the business at the end of June.
A spokeswoman for the company said that this facility has not been tapped as it delivered a “strong first half trading performance”. This saw revenues increase by 9 per cent on the year to $14.5 million (€12.7 million) and its loss before interest, tax depreciation and amortisation narrow by two-thirds to $600,000.
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Shares in Datalex have slumped about 85 per cent since the group was hit by an accounting scandal in early 2019 and, subsequently, the Covid-19 pandemic.
Mr Desmond, who now owns 49.3 per cent of the company, has been a consistent provider of finance to the company over the period. Two separate €25 million equity raises – in 2021 and last year – were largely carried out to repay emergency loans from the billionaire. The most recent loans carried an interest rate of 18 per cent.
The top three shareholders, which also comprise investor Nick Furlong’s Pageant Investments and former Glen Dimplex chief executive Sean O’Driscoll, own about 70 per cent of Datalex between them.
[ Datalex ‘continues to explore funding options’ as fresh Desmond backstop loomsOpens in new window ]
Datalex said it has made arrangements for a UK regulated specialist venue for matching buyers and sellers of unlisted stocks, called JP Jenkins, to offer shareholders the possibility of trading stock after it delists from the Euronext Growth Market in Dublin. This is expected to take place on September 12th, subject to shareholder approval at an extraordinary general meeting on September 4th.
“The board and I are strongly of the view that this is in the best interests of the company and its shareholders,” chairman David Hargaden said.
“In reaching this conclusion, the board engaged with stakeholders and considered the long-term vision and requirements of the business. Datalex has been a public company for the last 25 years, and whilst it has been a tremendous journey, now is the right time to proceed with private ownership of the company to support the next phase of growth.”
The delisting comes as another blow to the Irish stock exchange, known as Euronext Dublin, which has seen a wave of delistings over the past decade and a dearth of initial public offerings.
Datalex, led by chief executive Jonathan Rockett, said that leaving the stock market would allow management to focus more on strategy and execution and potentially give it greater access to capital.
“The board believes that the company will potentially have greater access to specialised investment sources as an unquoted company, including private equity, and strategic investors, which will provide a broader spread of funding options without the valuation pressures and liquidity constraints of the public market,” Datalex said.
The equity raise last year was carried out at a discount to the one three years earlier, and diluted the stakes of shareholders that did not participate in the most recent deal.
The concentration of the shareholder base – with three investors owning 70 per cent – further affected the liquidity of the stock, it said.
Cash on the company’s balance sheet at the end of June stood at $3.4 million, broadly in line with a year earlier.
