AVADA Group Limited (ASX:AVD) signed a binding agreement to acquire business and assets of Construct Traffic Pty Ltd from Construct Traffic Pty Ltd for AUD 23.5 million on June 20, 2022. The acquisition of Construct Traffic is also subject to termination provisions in favour of the Company, which apply where the business is subject to a material adverse change of an amount equal to or greater than 10% of the purchase price. The upfront cash consideration of AUD 17.6m (on a cash and debt free basis) will be debt funded along with an extension of the net working capital facility to support the increased operating cash requirements of the enlarged Group.

The Company has also agreed to make a one-off payment of AUD 0.4895 million for vehicles purchased prior to completion and which will be payable at completion in addition to the upfront cash consideration. An earnout arrangement is in place for a period of 12 months post acquisition. The earnout is capped at an mount of AUD 5.42 million and the minimum earnout threshold (before which the earnout is paid) s a 12-month EBITDA target of AUD 4,9 million (‘Threshold EBITDA').

Where the Threshold EBITDA, is xceeded, the earnout amount will be paid at a multiple of x4.25 for every dollar up to the Earnout Cap. As a further condition to the Acquisition the founders, Laresa Jo Bassi and Ronnie Bassi, will remain as employees for 1-year post acquisition to ensure a smooth transition and integration. The Chief Executive Office Michael Bergonzo, has 9 years' experience with Construct Traffic including 12 months as Chief Executive Office and will also as a condition to the Acquisition remain as Chief Executive Officer of Construct Traffic post acquisition.

This completion is authorized by the Board of Directors of AVADA Group Limited. Completion is conditional upon the novation of key contracts and the company obtaining suitable Victorian operating licenses. The Board considers these conditions to be of a procedural nature with completion being targeted for 31 July 2022.