London Capital Group (LCG) is updating shareholders today about its announcement last month of the proposed £17.5M financing from Charles-Henri Sabet led GLIO Holdings. According to the statement, LCG’s board continues to recommend the financing which will be voted on tomorrow, July 3rd.
Today’s release is in reaction to what LCG calls, “Comments in the press relating to approaches the Company may have received from third parties.” The comments are presumably from activist shareholders who are disgruntled with the proposed plan being brought for voting, and aiming to sway fellow equity owners in LCG to vote against the deal.
In terms of possible alternatives, when announcing the financing plan on June 17th, LCG stated that:
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“From time to time the Company is in discussions with third parties (including competitors) with regard to possible mergers and acquisitions transactions. The Company, as at the date of this document, has no current intention to pursue any such mergers or acquisitions or similar transactions (other than as disclosed in this document). Should the position change, an appropriate announcement will be made.”
The statement though doesn’t deny that LCG has in fact received other offers, such as an outright sale of the company, but that it has no intention to pursue alternatives to the financing. The proposed financing provides additional liquidity for LCG to regain its footing and increases its runway to continue its operation turnaround plans. However, the funding if converted to equity would become dilutive to shareholders, having already sent shares lower from 26p to around 21p. As a result, with the stock at multi-year lows and well off their year highs, it is likely that some shareholders may prefer to see the company shop around to the highest bidder, rather than accept the financing and potentially dilute their ownership in the company.
Speaking to Forex Magnates about why the board remains committed to the offer from GLIO Holdings, LCG CEO, Kevin Ashby, explained similarly to the above mentioned company statement, that they often do have discussions with other firms. He added though, that there hasn’t emerged a proposition that they view as being as solid with definitive terms and money to back it as the financing proposal which will allow them to fulfill the operational goals they published in June.
Ashby concluded by saying, “We are pursuing what we believe is the best for our shareholders.” Adding, “We have a substantial offer of £17.5M with money behind it (funds are currently in escrow), with published terms, and few caveats, and it is only pending FCA approval.”