Australian investment company Keybridge Capital is currently in the news for launching a cash & scrip bid for Yowie Group, which produces a special line of chocolate capsule toys in the Australian and U.S. markets, at $20 million.
Reportedly, the offer for the cash-rich company is evaluated at 9.2¢ per share, which is a 31% premium to the closing price of the target. It is however, below the net tangible asset backing of Yowie of 12.6¢ per share, which includes about $US 19 million in cash as of December 31.
Sources with the knowledge of the matter state that Keybridge, which currently owns 6% of Yowie, is offering a total of $9 million in cash to acquire another 48% as well as control of the company. Acceptances that are higher than the $9 million cap, are expected to settle with the $1 convertible, redeemable promissory notes of Keybridge, which traded at $1.03 the last time. Sources further cite that Yowie, which is principally focused on the US market, has struggled to gain traction in the sales area following another loss in December, owing to a 4% decline in revenue to $US 7.7 million.
Keybridge Capital, in a recent statement, said that the company has consistently failed to conduct profitable business operations and subsequently mentioned its significant losses. However, the company’s half-year report issued last month, had showed positive operating cash flow that led to expectations of its profitable trading by June end.
Keybridge further stated that the company intends to scale up its stake in Yowie up to a level at which it can exercise material influence for the Yowie board, through appointing its nominees as directors, for conducting a review of the company and its assets, liabilities and operations and further examine every possible strategic way in which Yowie can expand its current assets.