iSentia scheme booklet details net debt and worth ahead of takeover
iSentia has released the Scheme Booklet which provides shareholders with information about the proposed acquisition by Access Intelligence for all the iSentia shares that it does not already own.
The acquisition is being undertaken by way of a scheme of arrangement in Australia, with the booklet giving reasons for shareholders to vote in favour of the scheme.
ASX reveals net worth and debt of media monitoring company, iSentia
iSentia also announced that on July 16, the Supreme Court of New South Wales made orders approving the convening of a meeting of iSentia shareholders to consider and vote on the scheme (Scheme Meeting) and approving distribution of an explanatory statement which includes information about the Scheme, the Independent Expert’s report and the notice convening the scheme meeting (together, the Scheme Booklet) to Isentia shareholders and mentioned that Access Intelligence will not be able to vote in the scheme meeting in respect of its shareholding.
The booklet cited: “The Scheme provides the opportunity to realise certain cash value for all of your investment in iSentia. If the Scheme does not proceed, the iSentia share price may fall, including to a price that is well below the value of the total cash consideration. If the Scheme does not proceed, it is likely that iSentia will need to raise equity capital to repay debt and fund working capital and ongoing investment in the business.
“Such a capital raising would be dilutive to shareholders who are ineligible or choose not to participate in the equity raising. Further, there can be no certainty that the capital raise will be successful nor to the price at which any capital raise will be undertaken which may be well below the value of the total cash consideration.”
The booklet also mentioned that if the Scheme does not proceed, shareholders will continue to be subject to the risks associated with iSentia’s business and general market risks such as a changing competitive landscape, industry conditions, continued competition in Australia and New Zealand which has affected customer retention and pricing, ongoing COVID-19 headwinds in iSentia’s Southeast Asian markets, the results of the Copyright Tribunal, iSentia’s limited covenant headroom and business challenges faced by iSentia in FY21 rather than realising certain value for all of their iSentia shares through the Scheme.
“iSentia revenue and underlying EBITDA1 (a company’s earnings before interest, taxes, depreciation, and amortisation) for the 12 months to 30 June 2021 is estimated to be A$82 million to A$84 million and A$13.5 to A$14.5 million [respectively], (compared to.A$101.7 million and A$25 million for the 12 months to 30 June 2020), based on management unaudited accounts. Net Debt is estimated to be A$34 to AUD$35 million (A$23.4 million at 30 June 2020),” the booklet read.
These financials were impacted in part by the cyber incident in October 2020 that had an approximately A$3.3 million direct impact on revenue, approximately A$4.4 million direct impact on earnings before interest and taxes (EBIT) and an approximately A$4.4 million direct impact on cash.
In addition, and as previously reported, the cyber incident resulted in a delay to key strategic projects which were aimed to reduce churn in the business and, as outlined in the 1H FY21 results presentation, has impacted FY21’s results when compared to expectations.
If the scheme does not proceed, iSentia will continue with the execution of its current business strategy in FY22 and it is likely iSentia will need to raise equity capital to repay debt and fund working capital and ongoing investment in the business.
Such a capital raising would be dilutive to shareholders who are ineligible or choose not to participate in the equity raising. There can be no certainty that the equity raise would be concluded successfully nor to the price per iSentia share for any such equity raise.
The booklet added that FY22 may also be impacted by the business challenges faced by iSentia in FY21. iSentia is also awaiting the outcome of its application in the Copyright Tribunal.
It comes after Access Intelligence shareholders voted to approve the acquisition of iSentia following a general meeting that was held on 9 July.
Additionally, the company has received shareholder approval for the fundraising to raise a total of GBP50 million (A$92.830 million) for the acquisition.
The fundraising proceeds will be used, among other things, to fund the equity consideration of the acquisition and to repay the full amount of the drawn down debt of iSentia.
