Sale of CommTel Network Solutions via Deed of Company Arrangement

KordaMentha has completed the sale of CommTel Network Solutions, an engineering firm specialising in communication solutions for large construction projects, to the ASX-listed power and communications infrastructure company, Genus Plus Group, via a Deed of Company Arrangement.

Background

CommTel Network Solutions is an engineering business servicing large construction projects with communication solutions for mission and business critical networks. Servicing a mix of government organisations and ASX Top 200 companies across industries of utilities, mining, rail, telecommunications and public safety, the company has a workforce of 170 employees, over half being professionally qualified engineers.

In the last financial year, CommTel Network Solutions had experienced significant growth, achieving double-digit percentage growth to approximately AUD 65 million in revenue. Despite this positive performance, the company faced a cashflow crisis at the end of August 2024 due primarily to delays in major contracts, some partly due to weather events had pushed out milestones, which affected invoicing and cash inflows.

In the 12 months leading up to the appointment, the directors sought a capital partner and were advanced in a sale process but were unable to complete. Consequently, on 30 August 2024, the directors appointed Sebastian Hams and Andrew Knight of KordaMentha as Voluntary Administrators.

Our Engagement

KordaMentha’s plan focused on stabilising the business, securing the support of key stakeholders, implementing operating controls (primarily around cash management), and conducting a swift sale process. This involved extensive communication with staff, customers, and suppliers to ensure transparency and commitment throughout the restructuring process.

The sale process commenced immediately, adhering to the statutory voluntary administration timetable. Within two weeks of appointment, we called for non-binding indicative offers (‘NBIOs’) by mid-September and final bids by the last week of September. We received strong interest from a number of parties in the form of non-binding indicative offers and final bids in the form of draft Deeds of Company Arrangement (‘DOCA’) proposals.

Outcomes

A DOCA proposal submitted by GenusPlus Group, an ASX-listed power and communications infrastructure company, was recommended by the Administrators and approved by creditors on 7 October 2024. The DOCA was executed on 18 October 2024, providing the following outcomes:

• Rapid exit from administration, with effectuation occurring on 22 October 2024, after approximately seven weeks in administration.
• All major projects and services will continue without disruption.
• Over 90% of the workforce was retained, with non-continuing employees receiving full payment of entitlements.
• All secured creditors are to be paid in full.
• Unsecured creditors have been divided into three pools, with an estimated average return of approximately 24 cents in the dollar. Small creditors that are owed AUD 10,000 or less will receive 100 cents in the dollar, and select key suppliers are estimated to receive approximately 60 cents in the dollar. The balance of creditors are estimated to receive approximately 6 cents in the dollar.

CommTel Network Solutions is now well-positioned for future growth and stability, an outcome that is optimised for all stakeholders.

KordaMentha was also advised by Nicholas Edwards and Andrew Vincent of Hamilton Locke.

Genus Plus Group was advised by Justin Mannolini and Anna Schwartz of Gilbert + Tobin.