In a trading update for the six months to the end of June, the company said it intends to raise additional capital via a debt raise, although it did not identify the source.
Datalex, whose biggest shareholder is Dermot Desmond, is to seek shareholder approval for a transition to private ownership by cancelling its ordinary shares on the Euronext Growth market. It will post a circular to shareholders this week setting out the reasons. This will include a notice to convene an extraordinary general meeting in Dublin on September 4.
Datalex first floated in 2000 at a price of €6.84. Today the company’s share price was 30c, down 6pc in early trading.
Jonathan Rockett, the chief executive, said: “We are announcing a €6m debt facility to support our medium-term strategic priorities and our investment in product innovation. We expect this capital raise to close in August.
“We have also announced our intention to seek shareholder approval to delist from Euronext Growth as we believe this will better position the company to focus on strategic execution, accelerate innovation, and unlock greater long-term value for our customers and shareholders.”
Becoming an unlisted company would allow greater access to specialised investment sources, including private equity and strategic investors, Datalex said. This would provide a broader spread of funding options without the valuation pressures and liquidity constraints of the public market.
The board also believes the current levels of liquidity in trading of shares on Euronext Growth do not offer investors the opportunity to trade in meaningful volumes or with frequency.
The fact that 70pc of the stock is owned by just three shareholders also restricts liquidity. “The concentration of the company’s shareholder base and the lack of free float undermines many of the benefits that quoted companies generally enjoy,” it says.
The directors also believe that being listed means a “considerable proportion of management time” is spent complying with the requirements involved, and this will free them up. Furthermore, there are costs associated with being a listed company. “It is estimated that the cancellation will materially reduce the company’s recurring administrative and adviser costs by between $1m and $1.4m per annum,” it says.
David Hargaden, the chairman, said the board was strongly of the view that delisting was in the best interest of shareholders. “Datalex has been a public company for the last 25 years, and whilst it has been a tremendous journey, now is the right time to proceed with private ownership of the company to support the next phase of growth,” he said.
Datalex launched Stellex, a new offer and order platform, in the second half of 2024, saying it would give airlines the tools they needed to drive revenue and profit as digital retailers. Its customers include Easyjet and Aer Lingus. In its trading update Datalex said gross profits increased by 68pc, reaching €6.4m.
Mr Desmond, who owns just over 49pc of the stock, has been a consistent supporter of the company, giving it a series of loans in recent years.
Six years ago Datalex was rocked by an accounting controversy, after it materially overstated revenues on a contract. A projected $2.5m profit for 2018 eventually turned into a $10m loss. Soon afterwards it lost Lufthansa as a client.
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