Siteserv moves to cut residential exposure

SITESERV has moved to reduce its exposure to the residential building market with the 52 million takeover of utilities services provider Sierra Communications.

Sierra Communications operates from four locations across the country and provides services to the power, telecommunications and civil engineering markets in Ireland. Its customers include NTL, Sky and the ESB.

Siteserv said the takeover of Sierra would reduce its reliance on residential construction from half to 35% of group revenues.

“The acquisition of Sierra fits within the Siteserv strategy to develop into a broadly-based site services group and re-emphasises our plans to grow the company both organically and through acquisitions,” chief executive Brian Harvey said.

Sierra Communications had turnover of €52.3m and earnings before interest and tax of €7m in the year to end June 2007.

In the year to end April Siteserv had revenues of €45m and profits of €5.3m.

Sierra Communications was set up in 1979 by Desmond Whyte, the company’s chairman, and the four directors, Kevin Hoctor, Elliott Whyte, TJ Malone and Steven Quinlan.

They will get an up-front cash payment of €41.4m and €7.7 million Siteserv shares worth at least 4.6m. The Sierra owners will not be able to cash these in for a year.

Up to €6m is payable over the next three financial years if Sierra meets certain profits and performance targets.

Siteserv said it would also issue 885,000 share options to senior managers in Sierra at an exercise price of 59 cents. The shares would vest after four years.

The takeover of Sierra will be funded from Siteserv’s existing resources and by borrowing almost €43m.

The company has agreed lending facilities of €115m with its banks to pay for the acquisition and to refinance existing debt.

Shares in Siteserv gained 13% yesterday.