An investment company has offered Yellow Brick Road an off-market takeover bid to acquire all of the ordinary shares in the company for 0.09 cents.
The offer, made by Mercantile OFM (a wholly owned subsidiary of Mercantile Investment Company), is not subject to approval by YBR shareholders in a general meeting.
It would allow YBR shareholders to sell all of their YBR shares at a cash price that represents a 3.2 per cent discount to $0.094.
The offer is conditional on Mercantile OFM acquiring a relevant interest in more than 50.1 per cent of YBR shares on issue and no prescribed occurrences.
While Mercantile OFM does not hold a relevant interest in the company, its parent company, Mercantile MVT, and the company and its associates hold more than 56 million shares and have voting power of 19.97 per cent.
“Mercantile OFM considers that, while past performance is no guarantee of future returns, YBR’s historically poor financial and share price performance may indicate such performance may continue into the future without changes at YBR,” the Mercantile offer reads.
“YBR’s historical financial and share price performance has been poor,” it continues, noting that the company has accumulated losses of $38.5 million as at 31 December 2017.
“The YBR share price has fallen by more than 84 per cent in the past five years.
“After the offer, there will be no certainty that YBR shareholders will be able to dispose of their YBR shares at the offer price.”
The offer concludes: “The key benefit for YBR shareholders accepting the offer is that they will be able to realise $0.09 per YBR share for all of their YBR shareholding, in cash.
“The offer will allow all YBR shareholders to dispose of their entire shareholding. YBR shareholders who accept this offer will no longer be exposed to the risks and uncertainties of remaining a YBR shareholder.”
In a response to the bid, executive chairman Mark Bouris said that the bid was “unsolicited”, and in the view of the board of directors of YBR, it “materially undervalues the existing and future value of the company and is opportunistic in its nature, timing and pricing”.
“A fully considered recommendation by YBR’s board, along with the company’s target statement, will be provided to YBR shareholders in due course,” the statement continued.
“In the meantime, the YBR directors advise YBR shareholders not to take any action whatsoever regarding their YBR shares in response to the takeover bid.”
Mr Bouris concluded: “As the offers under the takeover bid must remain open for at least one calendar month from when it opens (which can be no earlier than 14 days after today), YBR shareholders will have ample time to make a decision in respect of the takeover bid after considering YBR’s response in the target statement.”
More to come.
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