Procurri Corporation

[cyclone]

Start a new thread for Procurri Corporation Limited

Procurri Corporation Limited, a leading global independent provider of Data Centre Equipment and Lifecycle Services, is pleased to announce that it has received strong investor interest for its initial public offering in conjunction with its proposed listing on the Main Board of the SGX-ST

Highlights :
* 68,880,000 New Shares 1.9 times subscribed
* First non-REIT and first technology IPO on the Main Board of the Singapore Exchange Securities Trading Limited in 2016
* Shares expected to commence trading at 9.00 a.m. on 20 July 2016
* Based on the Offering Price of S$0.56 for each New Share and Procurri’s post-Offering share capital of 280,000,000 shares, Procurri’s market capitalisation will be S$156.8 million.

Note :
- Data Centre Equipment refers to servers, storage and other networking equipment
- Lifecycle Services refers to various information technology hardware, equipment and software services rendered during the lifecycle of information technology hardware and equipment

[desmondxyz]

First day of trading already dived deep....closed @ 0.45, overpriced?

[jeremyow]

First day of trading already dived deep....closed @ 0.45, overpriced?

IPO = Its probably overpriced??

[brattzz]

no stabilising manager buying in meh?
how come like that?

a bit uncoordinated leh...

[desmondxyz]

no stabilising manager buying in meh?
how come like that?

a bit uncoordinated leh...

This kind of small cap mo stabilising manager one....btw, CEO and parent company bought in open market to give his poor child some support....

[brattzz]

since got CEO and parent company to fund, why still IPO? aiyoh! no logic leh...
Just go and take bank loan settle lah...

[cyclone]

Receipt of Unsolicited, Non-Binding Indication of Interest in Relation to Possible Acquisition of Shares in the Company

Procurri Corporation Limited announced that the Company has received an unsolicited, nonbinding indication of interest from a third party to acquire shares of the Company  by way of a possible voluntary general offer, subject to, amongst others, due diligence.

Shareholders should note that no definitive agreements have been entered into and there is no certainty that the Possible Transaction will be consummated.

Further announcements will be made by the Company as and when there are any material developments on the Possible Transaction.

Procurri Corporation closed at 0.26.

[hungting]

Any views on whether a GO is forthcoming?
Also what is the implication when Procurri says a third party is doing due diligence while major shareholders Decloud says they are engaging several parties with regard to its Procurri stake?
If several parties are involved, let’s hope the GO price if it materializes is Good !
Vested
Hope to see Procurri as another Techcomp or Chew’s development where due diligence lead to an eventual GO -!

[cyclone]

Market Cap : 284,689,000 x SGD 0.37 = SGD 105.33 Million

Update in Relation to Possible Transaction - Acceptance of Revised Non-binding Letter of Intent and Entry into Exclusivity Agreement in Relation to Possible Acquisition of Assets in the Company

Introduction
As stated in the Announcement of 5 November 2019, the Company had received an unsolicited, non-binding letter of intent from a third party in relation to a Possible Transaction. The Company had thereafter, updated on 7 November 2019, that the Company was reviewing the material terms of such letter of intent and the Company’s position in such respect, and thus requested for a voluntary suspension of the trading of the shares pending the release of an announcement on the Possible Transaction.

By way of update, after negotiations, the Company has, on 21 November 2019, agreed to the revised terms of the non-binding letter of intent (the "LOI") from the interested third party, namely, Park Place Technologies, LLC ("Park Place"), in relation to the proposed acquisition of the third-party hardware maintenance business (the "TPM Business") of the Group.

Information of Park Place
To the knowledge of the Company, Park Place is a private equity sponsored third-party maintenance company supporting assets in over 141 countries globally and has over 1,300 employees.

Salient Terms of the LOI
Some of the salient terms of the LOI are set out below:
(a) Proposed Acquisition Structure
The Proposed Acquisition is intended to be effected by way of a purchase of all of the assets of the Group comprising the TPM Business. Park Place will pay as purchase price a sum of USD One Hundred and Fifteen Million Dollars (US$115,000,000.00) for the TPM Business on a debt free, cash free basis and is subject to certain conditions and the due diligence findings.

The consideration for the Proposed Acquisition will be fully satisfied by way of cash (less a net working capital holdback, if applicable).

(b) Conditions Precedent
The entry by Park Place into a definitive agreement in relation to the Proposed Acquisition is subject to the receipt by Park Place of formal approvals from its board of managers and equity fund majority owners. Completion of the Proposed Acquisition is conditional on, inter alia, compliance with all regulatory requirements applicable to Park Place and the Company, including the regulatory requirements as prescribed or required by the Singapore Exchange Securities Trading Limited (the “SGX-ST”), completion of due diligence, execution and delivery by the parties of the definitive written agreements, board and shareholder approval, any other regulatory approvals, as required by law, and any other conditions precedent as may be contained in the definitive agreements.

© Exclusivity Period
The Company has also entered into an accompanying exclusivity agreement (the “Exclusivity Agreement”) which contemplates an exclusivity period in relation to the TPM Business commencing on the date of the LOI and expiring at 11.59pm (New York City time) on 31 December 2019, subject to three 15-day extensions, unless either party provides notice to the other party indicating otherwise (the “Exclusivity Period”).

More details in https://links.sgx.com/FileOpen/PCL%20GA%...eID=587147

[psnijders]

Procurri looks cheap to me at the moment and I have bought some shares. Procurri had some very large inventory write-downs in the last couple of years: $7.4m in 2020 and $10.0m in 2021. But average free cash flow over the last three years has been $14m. The free cash flow can be lumpy from year to year, due to movements in receivables balances. I do think the cash flow statement tells the real story here and not net income.

I think the large difference between net income and free cash flow in the last two years is mainly caused by the large inventory write-downs. Changes in the accounting treatment of "maintenance parts" seem to have contributed to this.

The company "reclassed" maintenance parts with a book value of $4.1m and $9.5m in 2019 and 2020 respectively. This is disclosed on page 109 of the 2019 annual report and on page 114 of the 2020 annual report:

2019:



2020:




This had the effect of decreasing "plant and equipment" from $22.1m on the balance sheet in 2018 to just $2.3m at the end of 2021. Inventory only increased from $21.8m to $26.0m in the same time period. So a lot of the reclassified maintenance parts seem to have been written off. This is also supported by the company's response to SGX's inventory questions on March 7: https://links.sgx.com/1.0.0/corporate-an...86d562edd8. The company simply writes off all inventory that is not sold within 395 days:



But if these "maintenance parts" to continue to be used in the company's third party maintenance (TPM) business, the complete writing off of the inventory would not represent economic reality. In the TPM business the company works with contracts for servicing their customers' hardware needs over a specific time period. The prepaid amount their customers pay is shown as "deferred income" on the balance sheet. The company's deferred income has been relatively stable from 2017-2021, fluctuating between $18.9m and $27.2m during these years. So the TPM business is not in decline.

It also seems very unlikely to me that the company's maintenance parts have become worth a lot less during Covid when supply chains were severely disrupted and many businesses often had to scramble to obtain replacement hardware parts.

So I think simply writing off inventory after 395 days is overly conservative and doesn't represent an accurate picture of what the inventory is actually worth in servicing the company's maintenance contracts. I think that's an important reason for the difference between net income and free cash flow.

In my opinion investors should use free cash flow to value the company. In any future offer for the company, investors should not focus on net income or NAV, which were highlighted by the Offerors in the partial offer of last year. They should look closely at free cash flow instead. Also, there was an offer from Park Place of $156.9m in 2019 for just Procurri's TPM business.

I think the company is very cheap. The market cap is $99.0m. Subtracting their net cash position gives us an enterprise value of only ~$82m. Now make your estimate of free cash flow in the coming years. By looking at the free cash flow generated in the past, and the growth trends in "Lifecycle Services" and "IT asset disposition", I think the picture looks positive. But it's very important that investors don't get tempted by an inadequate offer from Novo Tellus and DeClout who together hold 50%+ of the shares.

It could be that I'm completely wrong about all this btw.   All of the above is simply my opinion about what I believe is going on. I'm looking for feedback from other investors and Procurri shareholders. 

BTW: this is my first post here.   I'm an individual investor from Europe. I have a few other Singapore listed companies in my portfolio and I think I'll join the discussion on this forum about some of those companies as well.