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By Steve Moore | Tuesday 13 February 2018
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Spoken word audio on-demand platform company Audioboom (BOOM) has announced a proposed $185 million reverse acquisition of USA-headquartered online audio industry technology provider Triton Digital, Inc. – this following shares in Audioboom having risen from 3.34p to above 3.6p yesterday (hmmm!)…
It is argued “the directors believe that the proposed acquisition presents an opportunity to combine leading audio infrastructure, metrics and ad-serving companies that service the expanding global live and on-demand publisher base. The directors are of the view that there are natural synergies between the businesses”. It is also stated “for the year ended 31 December 2016, Triton recorded audited US GAAP turnover of approximately US$40.9 million and audited US GAAP EBITDA of approximately US$9.0 million (excluding non-recurring items)… For the nine months ended 30 September 2017, Triton recorded audited US GAAP turnover of approximately US$29.8 million and audited US GAAP EBITDA of approximately US$10.5 (excluding non-recurring items). As at 30 September 2017, the audited US GAAP net assets of Triton were approximately US$20.7 million”.
These compare to Audioboom previously updating that its year ended 30th November 2017 turnover was “expected to exceed £4.8 million”, adjusted EBITDA “a £4.3 million loss” and “year-end cash balance was c. £0.7 million, with additional available facilities of £0.75 million”.
It thus nearly all the money’s gone again – and indeed the latest announcement affirms that, whilst “revenues and trading performance have been ahead of management's expectations… in the event that the proposed acquisition does not proceed… the board believes that the company would need to undertake a fundraising in the short-term for working capital purposes, including any abort costs associated with the proposed acquisition”. Not exactly the foundations for a great deal I’d suggest!
The reverse takeover nature is further underscored by that “change the name of the company to Triton Digital Group plc” is proposed and that “it is proposed that Neal Schore and Mark Rosenbaum, who are, respectively, the current President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer of Triton, will join the board as; (i) President and Chief Executive Officer; and (ii) Executive Vice President and Chief Financial Officer, respectively. It is proposed that Robert Proctor (current Chief Executive Officer of the company) will remain as an Executive Director”. However, the deal remains subject “to shareholder approval, the entering into and completion of a share purchase agreement and raising the funds necessary to finance the proposed acquisition via the proposed placing. As such, there is no certainty that the proposed acquisition will proceed nor any certainty regarding the terms on which it would proceed”.
Er, yep – the proposed placing is for “approximately £155 million… to fund the proposed acquisition and to provide working capital”. Meanwhile, the shares are now suspended “until such time as either an admission document is published or an announcement is released confirming that the proposed acquisition is not proceeding”. I’m sure that will be reviewed here – but currently would be sceptical of a compelling deal for existing shareholders given the noted loss and cash foundations the company is negotiating from.
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