Just to add...16 May 2018 21:49
A reverse break fee is a fee payable by a bidder to a target company if the offer does not proceed for specified reasons, such as a failure to raise funds! They are designed to compensate the target for losses incurred such as advisers fees and mgmt time dedicated to the offer. In the UK, reverse break fees are increasingly common. The fees seem to vary enormously. In Australia is it <1% of the target�s equity value, though likely to become more like the U.S. where the fee can be anything. 12% in one case! So our �700k, being only about 0.5% of Triton�s value seems very small.
One thing I can�t fathom � a reverse takeover is typically used by a private company to acquire a public one, so the private group avoids the cost of going public itself. So why weren�t Triton simply invited to buy BOOM, being much smaller, and so easier to fund, and seeing as how Triton�s mgmt were to take control of the enlarged company anyway? Triton will trouser �90k and hold 1.78% of BOOM, though what would happen to the 1.78% should the company collapse, I don�t know. It seems, then, like everybody is losing out, so the failure of the acquisition itself my not be totally down to RP et al. However, going into this without some kind of MoU with potential investors for the full sum seems totally crackers. Without a contingency or Plan B, it put the very existence of the company at risk and that is simply recklessly stupid. I can�t help but think of SXX�s seemingly exquisitely orchestrated $4bn staged funding deal.
Candy told the FT (13-Feb) that he would support the new capital raising but did not clarify whether he would seek to maintain his current stake. Perhaps greed got the better of him by, basically, trying to sell his investment to Triton. Now, with the �1m CLN, he�s just trying to salvage something of his 15%+ stake (bit like Lord Alli at KOOVS). There seems to be something in the CLN terms that Candy gets first dibs on BOOM�s assets should it go belly up, so he�ll be OK, no doubt, but with BOOMs figures beginning to look rosier (from certain angles anyway), we may yet salvage something.
The CLN indicates that they knew the deal was doomed over 2 weeks ago. The flip side says we�ve had a 2-week head start in getting company-saving funding together, hence the statement at the end about being �confident that further funding will be available�. Then again, what else could they say? Nevertheless, as we are reduced to holding out a begging bowl, I can�t help but sense that any funding will be financially dreadful for existing shareholders� And, no, I don't see RP lasting beyond a reprieve of the company. IMVHO, he seems not to be CEO material.
Sign In
Follow the stocks
