A rebel shareholder's bid to buy out The Agency Group Australia (ASX: AU1) has been met with derision by the board of the real estate group.
The Agency, a company that itself was founded by a rebellious group of real estate executives who formerly worked for Sydney-based McGrath (ASX: MEA), says it received a letter from Magnolia Equities III Pty Ltd last Friday alerting it to its plans for an unsolicited and conditional offer for all the shares in the company.
Magnolia is associated with former director and existing shareholder of The Agency, Mitchell Atkins (pictured), who exited the board in May, about 10 months after his appointment.
Atkins joined the board after Magnolia Capital injected $5.6 million into The Agency through a placement and entitlement offer and his departure at the time was said to have been made to avert a conflict of interest and to ensure a smooth running of the business.
The Agency board today accused Atkins of briefing The Australian newspaper last Friday of his intention to bid for the company. The board took issue with the newspaper referring to the letter of intent as a takeover bid.
"The board considers this article to be misleading because the article refers to a 'takeover bid' as opposed to a proposal to make a takeover bid," says the company in a statement to the ASX.
"No formal bid for the company has been received. The board of The Agency does not consider that the proposal provides shareholders with enough information to even be considered a credible 'proposal' or constitute a legitimate alternative to the proposed issue of $5 million in convertible notes to Peters Investments Pty Ltd."
The Agency, which has been battling all year to repay a loan to Macquarie Bank initially due last March, has secured the $5 million from the private investment company owned by horse breeder Bob Peters. This is in addition to a previously announced $1 million issue to Peters. The convertible issues require shareholder approval at the company's AGM scheduled for 23 December.
The Agency says the proposal contains "conflicting and confusing statements" including reference to a "scrip takeover bid" and a "cash takeover bid".
The Agency is also sceptical of Magnolia's capacity to raise the necessary funds to secure the more than 72 per cent of shares in the company that it doesn't already control and to arrange a replacement for the company's Macquarie Bank facility.
Magnolia's proposed takeover price of 4c a share has also been blasted as it is below the company's current share price of 5c.
"The board would like to reiterate that no formal bid has been received and there is no guarantee a bid will be made," says The Agency.
The company has recommended shareholders take no action until they receive a formal recommendation from the directors.
The Agency was formed in 2017 following the defection of a group of top agents at McGrath, including Matt Lahood, Ben Collier, Shad Hassen and Stephen Chen.
The company posted a net loss of $9 million in FY20, although the directors were pleased to have achieved its first positive EBITDA result of $2.66 million.
Business News Australia
Get our daily business news
Sign up to our free email news updates.