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Silver Chef (ASX: SIV) has dumped a sale to Next Capital after key shareholder Blue Stamp Company (BSC) spoke out about the "groundswell of disdain" for the proposal.
Silver Chef now intends to work with BSC on a recapitalisation program, after announcing today it had terminated the Next Capital scheme implementation agreement (SIA) at 5pm on 31 August.
BSC is a Brisbane-based investor that holds a 19.99 per cent share in SIV and is backed by a large US university endowment fund as well as high net worth Australian investors.
The group has been increasing its stake in Silver Chef over the last few months, demonstrating its desire to exert further control over the business.
In July the board unanimously recommended shareholders accept the new offer from a consortium led by Next Capital for $0.70 per share. With that deal now off, the meetings to vote on the transaction on 6 September are officially cancelled.
In its letter to Silver Chef shareholders last week, BSC proposed a fully underwritten, accelerated, renounceable, pro rata entitlement offer to raise around $50 million at $0.31 per share. The funds would be used to pay a $35 million syndicated debt facility and fund the transaction costs and working capital of the company.
It appears that Silver Chef is open to accepting this offer. The Next Capital SIA does not involve a break fee, but the company still has to negotiate with financiers for 30 days to determine the termination's effect on Silver Chef's ability to comply with obligations.
"We are confident that with an improved balance sheet, less restrictive debt obligations, superior execution from a motivated Management Team and enhanced governance oversight from an aligned board, the business can be turned around, generating substantial shareholder given the fulness of time," said BSC director Luke Trickett last week.
At 10:30am SIV shares were down 24.65 per cent at $0.535.
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