Disposal of Cambridge, Portsmouth and Southampton fibre networks

26 September 2016

Redcentric plc (AIM:RCN), a leading UK IT managed services provider, is pleased to announce the disposal of its metropolitan area fibre networks in Cambridge, Portsmouth and Southampton to CityFibre Infrastructure Holdings Plc (AIM:CITY, “CityFibre”) for a total consideration of £5.0m, in line with book value, paid in cash on completion.

As part of the transaction, CityFibre have also acquired unlit network and ducting from Redcentric in Nottingham, Derby, Northampton and Newbury. Redcentric have signed a network access agreement with CityFibre to provide seamless access to the network in support of its customers, who remain with Redcentric and are unaffected by the disposal.

The network access agreement, which has a ten year duration, with minimum levels of annual commitment, which reduce over time. The expected impact on Redcentric is incremental net cash costs of approximately £0.5m per annum initially, although this is offset by reduced depreciation and interest charges meaning that the transaction is earnings neutral. The transaction strengthens Redcentric’s balance sheet, and provides further flexibility for future investment.

Fraser Fisher, Chief Executive Officer of Redcentric, commented;

“This disposal is in line with our strategy of control over our customer affecting core assets while not tying up capital where ownership is unnecessary. This mirrors our Datacentre approach where the physical buildings are held on long leases rather than freeholds but we retain complete control of the assets. We will continue to service customers in Cambridge and Portsmouth exactly as before, and expect to generate additional revenues and network efficiencies over time as a result of our developing relationship with CityFibre.”