AG FINANCIAL PUTS BUYOUT TO THE VOTE
Written on the 21 July 2014 by Nick Nichols
AG FINANCIAL Ltd (ASX: AHA) is finally progressing its planned $2 million acquisition of financial services company Avestra.
The deal, which was announced in April last year, is set to go to a shareholder vote at an extraordinary general meeting to be held at AG Financial’s Broadbeach Waters headquarters on August 21.
The deal will be funded by issuing Avestra, which is controlled by Clayton Dempsey, with 57.1 million AG Financial shares at 3.5c each.
Avestra supplies trading services to clients across trading a range of financial instruments, including options, CFDs and foreign exchange.
AG Capital chairman James Schwarz says these services align closely with AG Financial’s business activities in marketable securities services.
Following the deal, Avestra Asset Management will hold 24.8 per cent of AG Financial, and this has triggered the need for shareholder approval of the deal.
AG Capital has been working on a buyout deal for Avestra since the beginning of last year, with the proposal originally involving a placement of 150 million AG shares and the conversion of $430,000 of short-term debt funding provided by DJ Capital Solutions into equity.
AG instead opted to raise $2.8 million through a rights issue underwritten by Avestra in June last year.
This brought Avestra on to the share register as a substantial shareholder.
AG Financial has enlisted independent expert RSM Bird Cameron Corporate to assess the Avestra acquisition, saying it is the best means for fast tracking future growth for the company.
It is planning to raise a further $750,000 for working capital through the issue of 12.5 million shares at 3c each to Merill Capital, a company registered in the United Arab Emirates, and Shariott Investments, a company registered in the British Virgin Islands.
AG Financial, which debuted on the ASX in 2007 as Fox Invest Limited and later renamed Excela Ltd, was headed by Peter Spann until March last year when he resigned as executive chairman and sold his remaining shares in the company.
The company, which relocated to the Gold Coast from Brisbane late last year, has a long history of trading losses.
The independent expert’s report says that should the Avestra transaction fail to be approved, AHA could need further funding.Shares in AG Financial last traded at 4.5c each.
Author: Nick Nichols