The Tesserent Ltd (ASX: TNT) share price has had an eventful day so far with the company releasing 3 major announcements to the market in the past 24 hours.
Starting with the latest announcement first, the cybersecurity company said it has acquired yet another cybersecurity business, this time with government connections.
Tesserent has also made a deal to increase the amount of money the company can borrow. And finally, the company announced its admission to the ASX All Ordinaries Index (ASX: XAO) after the closing of trade yesterday.
All this news has made it an interesting day for the Tesserent share price, which plunged by 3% after opening but has since bounced back.
At the time of writing, the Tesserent share price is 28.5 cents, up 3.64% on yesterday’s close.
Let’s take a closer look at the company’s announcements.
New acquisition
In Tesserent’s newest acquisition, the company has purchased Secure Logic, a provider of managed security services to the NSW and federal governments.
Secure Logic operates a 24/7 security operations centre in Sydney and also provides security for corporate and financial clients domestically and internationally. The company has offices in Singapore, Kuala Lumpur and Bangalore.
Tesserent advised it plans to use the acquisition to leverage its state and federal government relationships and capabilities.
Further, the acquisition will help establish a strategic partnership to distribute Tesserent-owned products across Australia and New Zealand.
The company will pay for the acquisition with a mix of cash and Tesserent shares, putting forward $10.75 million and approximately 42,000,000 shares. It noted Secure Logic’s audited $9 million recurring revenue and $4.2 million sustainable EBITDA as a key reason for the acquisition.
Tesserent chairman Geoff Lord said the acquisition would help the company reach its goal of making a $150 million turnover by the end of the 2021 financial year.
Increased debt facility
Tesserent’s new agreement with existing debt facility provider PURE Asset Management has raised its debt capacity by $20 million, leaving the company with a total debt facility of $35 million.
The company said it planned to use the new debt facility to continue its strategy of growth through acquisition. It has previously acquired several competing cybersecurity businesses, including Pure Security, Rivium, Airloom and iQ3.
It also managed to secure improved repayment terms – the interest rate on the new facility has decreased from 8.9% to 8.5% per year.
As part of the deal, Tesserent provided Pure with approximately $20 million worth of warrants.
In this case, the warrants work like an IOU for company shares. Pure is guaranteed to receive nearly 44.5 million Tesserent shares at a future date, locked-in at 45 cents apiece.
These shares will be received directly from Tesserent. Tesserent stated that by agreeing to receive warrants, Pure showed it has faith in the company’s long-term strategy.
Tesserent co-CEO Julian Challingsworth said the company was pleased to continue its relationship with Pure.
This extended facility provides the funding cornerstone to continue to drive the company’s acquisition strategy with minimal dilutionary impact on our existing shareholders.
Growth through acquisition continues to increase our capabilities, geographic reach and the number of organisations that the Tesserent group serves. We now have increased funding flexibility and certainty around funding potential future acquisitions to continue this strategy.
Tesserent share price snapshot
Over the past 12 months, the Tesserent share price has risen by an incredible 612%. However, the company’s shares are also down by more than 18% year to date.
Based on the current Tesserent share price, the company has a market capitalisation of around $275 million with 1 billion shares outstanding.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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