Phone company seeks growth through market listing

By ADAM GIFFORD

GDC Communications, the largest reseller of Telecom's network solutions to the business market, is applying for a listing on the New Zealand Stock Exchange.

Chairman Stuart Johnstone said while the initial stock issue would raise between $7 million and $10 million, the aim was to have future flexibility to expand rather than to meet immediate capital needs.

"Over the past five years GDC has relied almost solely on internally generated funds to expand the scale of its operations and achieve strong and steady growth in financial performance," he said.

As more opportunities to expand presented themselves both here and in Australia, internal capital was no longer enough.

The 5,784,000 new ordinary shares would be offered by way of placement through lead broker Craig & Co and a small panel of other brokers.

The issue would give GDC 36,000,000 fully paid ordinary shares on issue, as well as 1,860,000 partly paid ordinary shares held by executives.

The offer price is expected to be between $1.25 and $1.75 a share. The offer will not be underwritten.

Mr Johnstone said the issue was the minimum needed to satisfy stock exchange "spread" requirements and to develop an active market for the shares.

Apart from expansion and possible acquisitions in New Zealand and Australia, some of the money will be used to fund Telecom patch contracts GDC has won for Taranaki and Hawkes Bay, which involve handling all installations and faults services.

GDC already has patch contracts for South Auckland and North Christchurch.

In addition to its work for Telecom and other carriers, GDC provides systems and services for businesses in the data, multimedia and telecommunications area.

The company started as a small data-cabling service.

However, it also sold PABX systems, which Mr Johnstone bought into after recognising the potential of the telecommunications industry through his work for merchant bankers Fay Richwhite preparing Telecom for its public float.

In 1995, he brought in a new management team, including former Ubix executive Paul Honnor as managing director.

Mr Honnor said the company tried to keep a step ahead of emerging technologies.

"We try to understand how they work, learn as much as we can about the business we are in, take the risk out, and then expand."

That has meant developing a capacity to build e-commerce solutions, and more recently it has built up skills in VOIP (voice over internet protocol) or internet telephony.

From 40 people in 1994, the company has grown to a staff of 320, including 140 technicians.