Those that are complaining about this deal - thinking it is an issue of some silly options that were recently granted - well you are missing the BIG picture of any Forbes & Manhattan company. Here are a few ways F&B profits from this deal:
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1. Change of Control clauses in the management contracts. ( See June MIC)
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Forbes & Manhattan, Inc
. - make a lump sum termination payment to Mr. Bharti that is equivalent to 36 months Base Fees plus an amount that is equivalent to all cash bonuses paid to Mr. Bharti in the 36 months prior to the Change in Control.
John Begeman
- a lump sum termination payment to Mr. Begeman that is equivalent to 36 months Base Fees plus an amount that is equivalent to all cash bonuses paid to Mr. Begeman in the 36 months prior to
the Change in Control.
Greg Duras
- make a lump sum termination payment to Mr. Duras that is equivalent to 24 months Base Fees plus an amount that is equivalent to all cash bonuses paid to Mr. Duras in the 24 months prior to the Change in Control.
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Here is a quick picture from the MIC showing who gets what....
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But WAIT! There is MORE!!!
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2. Fees payable to F&B for arranging Financing are usually par the course for these F&B Companies. And since the "deal" includes a $20MM Loan - Forbes & Manhattan is likely due a 6% Introduction fee. Plus, when the deal is finalized F&M appears to be due a "success fee" as well!
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3. Immediate vesting of all options - don't forget that this "change of control" means all of those options are now 100% vested...
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So all of THAT should give you something else to be excited about!
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....and you thought these guys made money when the shares of the company they ran went up!