As far because the special committee of Pivot Technology Solutions is anxious they’ve done their job: After months of negotiations, they’ve decided to place an offer, brought forward by a number of insiders, for the company’s shareholders for consideration.
And they’ve done that after searching of potential customers showed that neither a person equity firm nor a business buyer was prepared to provide a adequate premium to help make the offer attractive. Too, they’ve left the door available to other potential bidders by excluding a so-called break fee within the proposal.
“We believe it is compelling enough to put to shareholders since with the Inflexionpoint contract, Pivot’s revenues will probably be boosted even more,” said Doug Stuve, chair inside the special committee created assess a “share exchange” offer from a so-called Founder Group of shareholders.
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Inflexionpoint can be a private company which will sign a 10-year contract that will pay Pivot US$1.5-million every year as part of the deal.
In that share exchange, all common shareholders, in addition to the Founder Group are now being inspired to convert their holdings to higher yielding preferred securities. The sale has attracted its share of critics partly since they contain the offer undervalues Pivot.
“Add that [revenue boost] that this structure allows a considerable payment to be made [and] there is a real efficient approach to distributing cash,” added Stuve, who noted Deloitte, the advisor retained using the special committee, compared the Founder Group proposal with Pivot continuing featuring its current share structure.
“In the final outcome [Deloitte] concluded the sale was fair since the price of one of the most well-liked peace of mind in their opinion was a lot more than the requirement for our common shares,” added Stuve.
There are a handful of possible reasons: the preferreds (at $0.70 a share) have a very higher face value when compared with common shares which closed Thursday at 50 cents; and also the preferreds are slated to pay for a bigger distribution in comparison with common shares do. Last March Pivot implemented its first dividend of $0.03 per share each year. Pivot also announced a normal course issuer bid – two moves that gave its stock price a lift.
“We usually have thought that for you to do in order to return to a yield instrument,” said Stuve, who noted the Founder Group proposal came after earlier attempts to locate a buyer emerged empty.
So why don’t you let Pivot remain a public company and permit it to sign a revenue-sharing consulting agreement with Inflexionpoint, a business we have an overlap of executives? In this manner, all Pivot shareholders – and not simply the Founder Group – would directly participate the introduction of the newest entity. Inflexionpoint, located in Singapore, is large with revenues inside the billion-dollar range. And has ambitious plans.
Stuve said the “structure” generates financial savings to Pivot and people savings “are receiving towards the completely new public shareholders by means of increased distributions.”
Some shareholders, who bought Pivot on its growth prospects, are involved the Founder Group can redeem the preferreds anytime. Stuve said in the event that happened, the pref holders may be removed confined price of $0.70 – “a significant bump for all of us to think about it to shareholders.”
bcritchley@nationalpost.com
