The board of Pivot Technology Solutions, a California-based TSX Venture listed company that recently decided to a share exchange whereby several insiders would acquire control without any cash, have recently been put on notice by certainly one of its large public shareholders.
A few days when Pivot announced its support for just about any deal whereby shareholders (along with the what Pivot calls a “Founder Group” which owns 18 percent) would exchange their common shares for higher yielding preferred securities, Toronto-based investment company Torrent Capital stated it “vehemently opposes” the arrangement.
Torrent, which has of a 5 % stake working which has about US$1.5 billion in revenue, listed its objections: the offer undervalued Pivot; control had been given up without premium with no cash payment; all the upside would flow for the so-called Founder Group; along with the insufficient a highly effective valuation. Torrent said hello was looking towards coping with other stakeholders so that you can “maximize shareholder value.”
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Other your customers joined in: Ralph Garcea, an analyst at Cantor Fitzgerald issued research and posted a one-year target of $1.50 or twice the worth Pivot had assumed when valuing its common shares that’ll be changed into preferreds; other investors noted they bought Pivot for its growth potential instead of for the yield on its about-to-be-issued preferreds; others wanted Pivot to complete a sale to obtain more bidders; as the market adopted the scene the sale wouldn’t close since the shares remained well beneath the $0.70 per share deemed value.
Since then Pivot has filed additional information in regards to the transaction which is plans as what’s effectively a person company. The outcome: Torrent likes exactly what it sees less.
Torrent’s attention was attracted to Schedule From the so-called Arrangement Agreement. Referred to as Consulting Agreement between Inflexionpoint Asia Pte. Ltd. and Pivot. Based on that agreement, Inflexion can be a private company whose mandate “is to produce a multi-billion dollar, emerging markets-focused IT logistics company.” Inside the agreement, Inflexionpoint says it “desires to have interaction Pivot to help Inflexionpoint in rolling the business from usa.” Beneath the regards to that agreement, Inflexionpoint pays Pivot “an all-inclusive yearly fee of US$1.5 million,” for just about any choice of services. Anything includes a 10-year term.
In addition, the consulting agreement notes, Inflexionpoint adopts a revenue sharing arrangement with Pivot that pertains to “any direct new international business obtained by Inflexionpoint with the leveraging of key relationships produced by Pivot to Inflexionpoint.
Those developments C which Torrent deemed “a formal structure forwards and backwards entities designed to expand Pivot’s operations globally C have generated an empty letter being delivered to Pivot’s board. “It’s a cloth development for Pivot,” states the letter.
More disturbing for Torrent is “the overlap in corporate structure forwards and backwards entities.” Specifically a couple in the Founder Group can also be founding individuals Inflexionpoint, while John Sculley (Pivot’s chairman) may also be chair at Inflexionpoint.
Now Torrent wants the board to “initiate an entire and fair independent business valuation and strategic review;” using this to drag the going private transaction and asks that “those those who are clearly conflicted within the proposed agreement have virtually no input or influence within the special committee came from here forward.”
Calls one part of the Founder Group maintained the very best Pivot’s special committee that happen to be designed for the interview Thursday.
bcritchley@nationalpost.com
