RE:RE:Alumina Partners draw-down equity; Prosnack closing extendedGAMOOD2 wrote: Perhaps someone with more business acumen then me could explain why this situation exists and why the hefty fees. Is it a good deal or not? Should the company just walk away from the deal? Why wouldn't the deal close before these fees came into effect? They should've had enough time prior to announcing the deal to close it on time or walk away?
The Company also announced that it has agreed to extend closing of its proposed acquisition of Prosnack Natural Foods Inc. (“Prosnack”). To extend closing, the Company has agreed to an extension fee of $5,000 per business day prior to closing, up to October 20, 2017. After October 20, 2017, the extension fee will be $10,000 per business day, up to the revised closing deadline of October 27, 2017. The Company has also agreed to pay to Prosnack an additional $25,000 on October 20, 2017, if the Company has not completed the Prosnack Acqusiition prior to that date. Payment of the extension fees or other amounts will be subject to the approval of the TSX Venture Exchange if in excess of $25,000 in total.
Hey “GAMOOD2”,
I meant to respond sooner. The first news of the acquisition was in this
news release of July 12th about a LOI with a natural food company. I/we do not know how long the discussions had been going on prior to the news release, assume 1 month, that “suggests” a start date in the middle of June. The definitive agreement was announced a month later in this
news release of August 11th.
My experience with selling our business was once we made the decision to sell we wanted to get it over and done with – you know “
Show me the money”. We were selling and moving on.
Although we (the sellers) and the buyers had agreed on everything there were other parties involved (lawyers, bankers, landlords, leasing companies, clients, etc.) and it just added a lot of time to the whole process.
During that time a few things changed for us from our original negotiating point – more cash on hand, a couple client changes, staff changes, etc.
The deal with Prosnack involves principals carrying on in one form or another -
Alan Maddox is expected to become Executive VP, Sales and Marketing & Jim Pratt is expected to join Naturally Splendid's Advisory Board. So I suspect for Alan & Jim it wasn’t like my partner and I when it was
totally about show us the money. Although as sellers I am sure they both would like $ sooner than later, don’t we all?
IMO it was the “other parties” involved that caused the delay in finalization of the deal.
Given that NSP was willing to pay a daily extension fee I suspect that:
1) NSP knew they were within days of finalizing the deal
2)
* it was not unreasonable in the circumstances for the sellers to request the additional fees * 3) the $ amount of the fee implies more than just a delay in finalization of the deal
4) NSP saw value for money even if they had to pay daily extension fees
My
speculation -->> That things changed in some
positive way from the sellers point of view after the definitive agreement was reached but before all the other parties were satisfied and willing to “sign off” on the deal.
It could be/have been a number of things: better sales than expected, higher margins, new clients, etc. Your guess is as good as mine! Time will tell.
I posted reasons
why I like the deal on July 12
th, liked it then and
like it a whole lot more now.
Use or flush!
*****
“
Living in the sunshine”
Always DYODD
DKM