CloudCoCo selling MSP business to Aspire

CloudCoCo Group is expecting to complete a sale of its managed service provider (MSP) business by the end of the month, after announcing it was selling to Aspire for £9.2m.

The firm had been going through a reorganisation process and indicated to shareholders that it was looking to sell CloudCoCo Limited to meet some of its loan commitments.

Back in April, CloudCoCo reached an agreement with its existing loan note holder, MXC, to extend the redemption date of the loan notes to 31 August 2026. That was also the moment Mark Halpin stepped down from the board and CEO role, with Ian Smith stepping into take over on an interim basis.

In a letter to shareholders, Simon Duckworth, CloudCoCo’s non-executive chairman, outlined the position the business found itself in.

“The company’s most recent financial year ended on 30 September 2024 and the directors will be seeking to publish audited financial statements for that year as soon as possible in the first quarter of 2025. Unaudited financial statements are expected to show revenues for the year of at least £27m (2023: £25.9m) and net debt of approximately £6.9m,” he said.

“FY24 was a challenging year. The Ccmpany encountered significant hurdles in achieving the board’s expected growth, largely due to rising costs of sales. In addition, the directors believe that the company’s sub-scale position has limited its ability to expand quickly enough to be confident in meeting the repayment obligations of the MXC Loan Notes due in August 2026,” he added.

Duckworth said the board had deemed the Aspire deal was the best option to secure the future of the business and was the only certain way to guarantee it would be able to repay the loan.

“The company would be reliant on improved market conditions and an improvement in trading for the directors to be confident of this. As a result, the directors believe that a corporate transaction is the best way to secure the long-term future of the company and to repay the MXC Loan Notes,” he stated.

The firm shared plans to grow the remaining business indicating that after the Apire deal was completed, ideally after a shareholder vote at the end of the month, the business will continue to be an IT product reseller via its business-to-business operation in Sheffield. It will also run its e-commerce platform, MoreCoCo, which delivers products and services via its wholly owned subsidiaries, Systems Assurance and More Computers, which were acquired in September 2021.

“The directors intend to grow the VAR business, believing that there are strong opportunities for organic growth, particularly within the e-commerce division, in line with global trends. Since becoming part of the group, the e-commerce division has demonstrated notable growth. Following the completion of the proposed sale, the group is expected to have sufficient working capital to continue to drive organic growth and meet the ongoing demand for e-commerce,” said Duckworth.

Gateshead-based Aspire has already been active in the M&A market this year, picking up Glasgow MSP Cloud Cover IT.