What is going on ?As we "impatiently" wait for some update on where Replicel is going in 2024 we consider some of the possible options:
Sell the company
Sell some of the assets
Take the company Private
With the top ten shareholders owning approx. 63 % of the company I think the next move is to take the company private. It has numerous advantages the biggest being cost of operation savings. So how does Privatization work ?
From Macmillan: "A Canadian incorporated public company may structure a going private transaction a number of ways. In Canada, the three most common ways are a Court approved plan of arrangement, a take-over bid (with a squeeze-out or second step transaction to follow, as necessary) or an amalgamation. The choice of structure is driven by numerous factors including which facilitates the fastest path to closing the deal, financing requirements, required security holder approvals, required third party approvals (such as stock exchange, Competition Act (Canada), Investment Canada Act or industry specific regulatory bodies), how liquid or illiquid the stock of the target is and the risks associated with each of these factors. A holistic assessment of these and other deal specific factors is required to assess the likelihood of a transaction successfully completing."
I rule out a Take-Over Bid and an Amalgamation. That leaves Court Approved Plan of Arrangement.
What is that ?
From Macmillan:
"Plan of arrangement. In Canada, most going private transactions are effected pursuant to a plan of arrangement. A plan of arrangement is a Court supervised process effected under the provisions of the target public company’s governing corporate statute. A plan of arrangement is typically negotiated between the prospective purchaser and the target public company’s board of directors or a special committee of the board and is subject to both securityholder and Court approval; the latter requiring the Court’s determination that the terms of the arrangement are “fair and reasonable” to the affected parties.
To effect a going private transaction by way of plan of arrangement, parties enter into an arrangement agreement that establishes the principal terms of the transaction. Following the execution of the arrangement agreement, the parties apply to Court for an “interim order”. The interim order describes the process of calling and giving notice of the meeting of securityholders, the conduct of the meeting, and the level of approval by which securityholders of each class must approve the arrangement (generally 66% to 75%, depending on the province of incorporation of the target company and whether the holders of equity securities or creditors of the target will be statutorily required to vote respecting the plan of arrangement). The Court will almost always grant a right of dissent to each securityholder, providing securityholders entitled to vote at the meeting who oppose the proposed transaction to dissent and receive “fair value” for their voting securities as determined by a Court. Once the target public company obtains the interim order, it is required to prepare and distribute a management information circular to securityholders prior to the meeting. A final order of the Court is obtained following the meeting if the securityholders approve the arrangement. Thereafter, provided other closing conditions are satisfied under the arrangement agreement, the transaction may close."
I hi-lited the approval percentage: 66 2/3 % - 75 %