Zamano PLC – IR:ZMNO
Share Price – €0.04 (as of suspension)
Market cap – €4.3M (as of suspension)
I first looked at Zamano on February of this year, thinking it was a company that was selling below cash that was likely to liquidate imminently. While the situation hasn’t quite gone as I anticipated, recent events have left me hopeful that I can still turn a profit on my investment.
I originally speculated that the company would return cash to shareholders before the shares were suspended on March.
This essentially says that under AIM listing requirements, the company has 6 months to either consummate an investment with their current cash pile, or face de-listing. My thoughts are that if 5.5 months have passed without such an announcement, then it’s likely that the company will have no mandate to go down the unlisted route, therefore, they will have no choice but to return the remaining capital to shareholders.
Shortly before suspension on the 6th of March, the company reported that it had been in discussion with possible suitors, but these discussions were still “early stage”. Shortly after this, the shares in the company were suspended, no cash would be returned until all possible deals were evaluated.
Whilst this process has been ongoing the Board has also received a number of proposals regarding possible investment opportunities that would involve a retention of the Company’s listing. The Board did not consider the majority of such approaches to be in the best interest of Shareholders; however, discussions are ongoing regarding certain proposals. These discussions remain at a relatively early stage and, as such, the Board is not yet in a position to determine if any of these proposals would be in the best interest of Shareholders and there is therefore no certainty that any transaction will be agreed.
We were then provided to a further update on April 27th indicating that a deal had been struck.
Whilst this process has been ongoing the Board has also received a number of proposals regarding possible investment opportunities that would involve a retention of the Company’s listing. The Board did not consider the large majority of such approaches to be in the best interest of Shareholder’s; however, more detailed discussions have continued with one party and the Company has recently signed a memorandum of understanding with that party to acquire certain operating assets in return for the issue of new shares in the Company which will constitute a reverse takeover transaction.
The company also indicated, that as part of the reverse takeover, it is likely that the shareholders will be offered two options. Take part in a placing in the new company, or else tender share for cash.
Alongside the reverse takeover transaction the new group will also raise new capital via an underwritten issue of new shares to a new investor. zamano shareholders will be offered an opportunity to participate in the new placing pursuant to the proposed reverse takeover transaction and it is intended that the funds from such a placing will be used to develop the new business. Under the arrangement referred to above, zamano shareholders will also be offered an opportunity to tender up to 100% of their current shareholding in the company for cash in a share tender programme.
Interestingly, over the previous weekend, The Times have leaked the company in question is an Irish builder, Menolly Homes.
The proposed reverse takeover is interesting. Traditionally, I believe a shell with an UK listing is worth about £200-300k. The fact that Zamano has an Irish listing as well, might increase that value, especially considering that the proposed takeover is coming from an Irish builder, who presumably will to maintain both the Irish and UK listing. If reverse takeover costs are going to be borne by the acquirer, then I would expect some upside here. Maybe I am being hopeful, but surely 4.8c-5.3c cash return as part of a tender is possible?
What’s even more intriguing though is if Zamano shareholders choose not to take part in the tender offer, they might get the opportunity to do a little better again. Typically, in the event of a placing, those taking part are offered the opportunity to invest at a discount to the market. Perhaps this will be one of those occasions?
The next update is promised for end of June 2018, which I eagerly anticipate. At that point, we should get a clearer picture on which is the best option to pursue.
I hold shares in the aforementioned share.