Nasstar is “continuing to trade as normal” despite the administration of its holding company, according to a statement from its administrator.
PwC was appointed as administrator for Nasstar Group Ltd on 13 September after the £200m-revenue Microsoft partner encountered profitability and cashflow issues in the wake of its recent M&A drive.
Immediately following PwC’s appointment, contracts were exchanged to sell Nasstar Group Ltd’s shares in Nasstar Ltd to ‘Togo Bidco’ in a so-called ‘pre-packaged administration’.
Nasstar Ltd, which houses circa 850 employees sit, as well as its subsidiaries “continue to trade as normal and no operations are impacted by this transaction”, a statement on PwC’s website reads.
Background briefing
A statement of administrator’s proposals – dated 20 September and recently filed on Companies House – sheds more light on the circumstances leading up to Nasstar Group Ltd’s administration.
Ranking 24th in Oxygen 250, Nasstar grew rapidly via a string of 20 acquisitions in ten years, doubling in size in July 2021 when it acquired KCOM ICT.
As recently as August 2023, reports suggested backer Mayfair Capital was preparing it for a possible sale.
The cloud, comms and cyber specialist saw calendar 2022 revenues vault by nearly a third to £212m, although EBITDA narrowed from £23.4m to £18.9m and net losses widened from £54.4m to £88.1m.
Nasstar Group’s M&A drive left it “highly leveraged”, with its secured creditors owed an outstanding debt of £230.7m, the statement of proposals acknowledges.
Its profitability and cashflow were hit by the “exceptional costs” associated with transforming its legacy acquisitions, while it also experienced a “high rate of customer churn” as it refocused on the upper midmarket.
Preference for a pre-pack
On 6 August, Nasstar Group Ltd engaged PwC after a failure to comply with its 2023 full-year accounts deadline led to a covenant breach.
Despite efforts to find a solvent solution, it was determined that a sale of its shares in Nasstar Ltd and its subsidiaries was the best option.
The purchaser of Nasstar Ltd’s shares is indirectly owned and controlled by entities affiliated with the secured creditors, with a number of its appointed directors also being employees of the secured creditors, the statement of proposals confirmed.
In addition, Nasstar CEO Paul Cosgrave “may be appointed” as one of its directors.
The pre-pack sale “ensures the solvency of Nasstar Ltd and all of its trading subsidiaries, protecting customer and creditor positions, as well as the employment of circa 850 employees”, the statement of proposals read.
It is for a consideration of £1.
The sale is conditional on the purchaser achieving clearance from NISA [the National Security and Investment act], a process that is expected to take up to 30 business days (ie up until 13 October), the statement of proposals stressed.
IT Channel Oxygen has approached Nasstar for comment and will updated accordingly.
A statement from PwC issued to IT Channel Oxygen read:
“Toby Banfield and Zelf Hussain of PwC were appointed as Joint Administrators of Nasstar Group Limited (“the Company”) on 13 September 2024. The joint administrators’ appointment is over Nasstar Group Limited only, which is a holding company. Nasstar Limited and its trading subsidiaries are not impacted by the appointment.”
