Tuesday 17 October 2017

Shareholders are left with €5m in cash at Zamano

Company to become a cash shell after selling operations to management team for €1, writes Gavin McLoughlin

Zamano shareholders can expect to share €5.3m in cash, unless the company finds a suitable investment or is the subject of a reverse takeover. Photo: Getty Images
Zamano shareholders can expect to share €5.3m in cash, unless the company finds a suitable investment or is the subject of a reverse takeover. Photo: Getty Images
Gavin McLoughlin

Gavin McLoughlin

Zamano shareholders can expect to share €5.3m in cash, unless the company finds a suitable investment or is the subject of a reverse takeover.

The company will become a cash shell after agreeing to sell its operations to its management team of Brian Gilsenan and Michael Connolly, for €1.

The deal requires that nearly €1m has to be left in the operating companies to account for the amount by which their liabilities exceeded assets.

A further €555,000 is being given to Gilsenan and Connolly's company Kilavan, mainly to provide for potential future liabilities which may have required an indemnification.

"We're simply saying look to draw a line under it we'll give you a certain amount of cash and that's it," Zamano director Pat Landy told the Sunday Independent after the company's agm last week.

The precise buyer and financial terms had not been announced but the company had said it was close to a deal.

After the deal is completed, Zamano estimates it will have to spend around €282,000 on deal costs and plc liabilities. This will leave €5.3m for shareholders - unless the company decided to make an investment or is the subject of a reverse takeover.

But any deal will have to come soon as the most likely outcome is to make a cash distribution as part of a process expected to take six months.

The company - which had been active in the premium rate SMS business - decided to wind down its operations last year after regulatory changes, and was examining ways to proceed.

"I suppose, like anybody associated with a company, we would have liked to have seen it turn out differently," Landy said.

"We did make efforts to sell the business. We also made efforts to bring third party businesses in, but those deals didn't happen.

"So ultimately when we were confronted with the very challenging regulatory and competitive environment, we had to make the call. Do we protect the shareholder interest and get them the maximum amount of cash back? Or do we try and trade our way through and find new businesses to put in there? And we decided against that."

The company received a takeover offer from an unidentified party in 2015 but that deal didn't proceed after the parties couldn't agree on terms.

It also eyed a potential merger with Silicon Valley-based SoHalo - a mobile-marketing firm - but no deal was done.

Landy said the company had looked at selling the plc as a whole but that wasn't feasible given the difficult market.

"Then we proceeded to look and see if there were people who might be interested in buying the operations, recognising that we'd have to assist that process.

"And we took the view that that was the best way of drawing a line under the current costs. Remember we'd be in a sort of wind down mode, we'd be losing money, and shareholder value would be diminished. So we felt it was better to do this deal."

Sunday Indo Business

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