Classic So KBC locked out so they make a lowball bid. They have a stagnant holding they couldn't leverage off and their very presence on the register is probably part of the reason for shareprice decline . A bit self serving. Then you have to wonder if the bid ids a ruse to get volatility and interest back in YOW or a real bid ? They are trapped with low volume even today so they had little choice and with no management access or control ..
What is their average buy in? What is it at levels of possible outcomes? Reality of what anything on YOW books is worth to another company and cash in bank or cash in bank after closing it down? Machinery is stuff all, cost of leases, cost of shutting down production contracts etc etc. Wonder if Hank would take it on and how much he would have to be paid ? Have KBC already had a chat ?
Then the KBC bid
we want to take you over but we don't have enough money and can't finance it. So not really a full cash offer.
So if all holders accept then instead of getting all cash you will get a note from us and we will pay you interest. Ie you loan them the money till july 2020. How secure is the note - hmm look at their performance. . Everything about the non secured notes is to the advantage of the issuer in regards to if they pay you out as cash at the end or % discount to buy KBC of which is on a weighted av price in a illiquid easily manipulated stock. Bidder is extremely smart and has set up structures in its own company to maximise its own vested interest and IMO normal holders never get same benefit as managers and insiders but that is another whole book to be written on small funds, illiquidity and the way they renumerate themselves etc etc
It will be a fun read of bidders statement and response . Poor YOW management aren't getting their performance shares paid out in this offer which is a way other bidders generally convince management to accept bids along with continued employment min period or payout , bonus etc etc. Fine line in bid in regards to cash shows just what KBC are after and if YOW don't want to deal with it or a revised offer just beware if YOW buy or do something with cash to get rid of the fleas it has attracted. Yes they deserve fleas with the way the business has been run but have not shaken them as they have been so slow to react IMO.
Seeing a valuation of IP etc for YOW will be interesting and will see just what they have been up to and real updates sales results , margins , full neilsen etc etc and if YOW don't use these as a defense then you know they are not good.Even up to date info on exactly what they are up to in each country, airports, duty free, Uk Canada, Australia, New Zealand USA etc etc to see what is real and what is dreams. What happens when in under 12 months walmart are possibly no longer obliged to continue purchase of yowies due to the repayment of "damaged" stock ? Does change of management a covenant leading to change in repayment terms? Perhaps we will get more very important data from the new marketing manager on internet interactions , engagement and and tell us all how good it is. Ha ha ha With a now minuscule marketing budget compared to the IMO previously wasted one and time even when they had OK cartoon shorts etc you have to wonder when they didn't manage top leverage off it.
Still have outstanding court action as a possible liability. Be interesting after a successful bid if case has enough bite to get injunction to freeze transfer of cash away from YOW ( ie yow loan KBC cash as a example at a silly discounted rate for them to punt for KBC holders benefit) . How much can be extorted by the US court case or if KBC want to sell on YOW business what cash do they need to attach to clear away Hank? Have they already done a deal with him? .
Going to be interesting to see if YOW management have skills in house or access to them to defend themselves effectively and actually get shareholder value or just capitulate after a increased bid and a bit of a tussle. Just how much do they want to keep their cushy jobs and since they have stuff all interest in FP ordinary shares will they just " do their best" but really aiming for payout on sacking or retrenchment.
This is a world of pain IMO for YOW management as it takes their eye off the ball yet again ( assuming they actually had eye focussed on the ball) and a massive disruption and distraction they they are obliged to respond to.
(20min delay)
