Rights issue will test CommSoft support

By Phil Boeyen, ShareChat Business News Editor

Thursday 31st January 2002

CommSoft Group (NZSE: CSG) says it will use cash from a rights issue for working capital and to help push sales of its software products.

The communications software company has announced a 1-for-1 rights issue at A5cents per share. The rights are non-renounceable and, if they are all taken up, will raise A$6.2 million.

On Wednesday a major CommSoft shareholder, Auckland-based venture capital company Strathmore Group (NZSE: SMR), announced it has been selling down its CommSoft stake recently and plans to completely exit the company over the next year.

The selldown is part of Strathmore's new strategy to exit all its investee companies apart from Global Online, which runs the customer loyalty programme Kachingo!.

Although CommSoft has never lived up to expectations its chairman, Greg Gardiner, says it now has the management, staff, products and distribution channels to produce significantly improved results.

"The directors believe that, with shareholder support, CommSoft Group can complete its restructuring and deliver the improvements in performance and value our shareholders require.

"We believe the issue offers all shareholders the opportunity to invest in the company at attractive price levels."

Group managing director, Mark Lunt, says the rights issue is a vital part of building a successful and prosperous group.

"We have concluded very promising new distribution agreements and partnerships in the UK, Australia and the USA and breathed new life into channels in New Zealand and South Africa.

"With shareholder support the board and management expect to capitalise on the many opportunities the group has created."

CommSoft has four major products - CallMaster, NetMaster, CellMaster and Brains. Of those, management is expecting NetMaster to deliver the most growth this year.

CommSoft shares floated on the market in September 2000 at A$1.10 but were slammed when the company revealed debtor problems, expensive expansion and a lack of sales.

Strathmore chairman, Phil Norman, yesterday told his shareholders that the downturn in CommSoft's fortunes "was not anticipated and represented a significant departure from its advice to us and the forecasts set out in the company's prospectus."

However he added that remedial action in the first quarter last year, including installing a new management team and slashing staff numbers, has dramatically improved the company's performance.

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