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Private equity firm Next Capital has proposed to acquire Silver Chef (ASX: SIV) for $39 million, but the embattled hospitality company says the deal will need to be sweeter before it considers an acceptance.
Silver Chef has been beset by financial issues since it dumped the GoGetta equipment financing brand early last year and as of 30 June 2018 it remained in breach of debt agreements.
Sliver Chef sought waivers from its financiers to undertake a capital raising of $45 million to repay these debt facilities.
Less than two weeks ago when Silver Chef released its financial results for the half year, it admitted that it had not yet raised this minimum $45 million mark and had sought an extension from its financiers until the end of April.
It also revealed plans to raise a further $20 million in equity and appointed Morgans Corporate as Lead Manager for the stint.
Noting this indebted position, Next has offered to acquire all SIV shares for $1.00 per share which is a minor increase on its previous $0.99 closing price. Silver Chef has in turn provided access for due diligence.
Next will also defer 50 per cent consideration on any net capital released from Silver Chef's run-off of GoGetta that exceeds $10 million to be shared among shareholders on a pro-rata basis.
However, Silver Chef says at this stage there is "no offer from Next that is capable of acceptance" and there isn't any certainty that the proposal will proceed in its current form.
The proposal by Next follows Silver Chef posting a statutory net loss of $11.7 million at the half year.
Its revenue also fell to $121.6 million, down from its previous corresponding result of $146 million.
While its financial performance still suffers at the hands of GoGetta, Silver Chef is continuing to slog through the capital management plan established following the rocky offload.
CEO Damien Guivarra said the company has worked co-operatively with its lending partners to progress this plan.
"We have progressed our multi-year business transformation project, including a roll out of our online approval and application portal, a $5 million cost out program, revised credit and collections framework and over 50 per cent year on year growth in the Canadian market," explained Guivarra.
"Silver Chef is well placed to capitalise on growth opportunities once the capital management plan is executed."
Shares in Silver Chef rallied 16 per cent yesterday pending the announcement of the takeover.
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