GreenBank Capital Inc. (CSE:GBC) OTCMKTS:GRNBF) (FRA:2TL), a next-generation merchant banking business has announced that investeee company Staminier Limited has successfully raised £10 million ($17.2 million) and completed the acquisition of The Substantia Group Limited under the terms announced on February 16, 2021.
GreenBank currently owns 19% of the shares of Staminier and has an option until April 14, 2021, to acquire the remainder of the issued share capital of Staminier.
The board of GreenBank said it believes the value-enhancing nature of the Substantia transaction makes it a compelling acquisition for Staminier and further cements the robust prospects for Staminier, and therefore GreenBank's investment in Staminier, going forward.
READ: GreenBank Capital: Meet the team that’s changing the way merchant bankers do business
Substantia is a UK-based property and business consultancy offering clients a wide range of outsourced services. It works with or for blue-chip companies and independents alike, based both in the UK and overseas, including British Land, Netflix, Sainsbury's, Morrison's, and L&G, and for UK local authorities, including Bromley, Bexley, Lewisham, Greenwich, Gravesham, Croydon, Havering, Chichester and Tower Hamlets.
GreenBank also noted that the reason it has not already exercised its option to acquire the whole of Staminier - and why the period of the option was previously extended - is because the investment fund providing half of the £10 million funding to Staminier was not able to invest in a company which, at the time of investment, was either a publicly listed company or a subsidiary of another company and the board did not wish to stymie this fundraising.
The company noted that the investment fund's rules do allow it to receive shares in a public company on conversion of its debt - ie. in the event that its investee company subsequently became listed or was taken over by a listed company. The terms of the loan provide that a change of control prior to conversion of the debt, would mean that Staminier would be immediately obliged to repay the Investors plus a 100% premium.
GreenBank said it has made the decision that it wants to proceed with exercising its option to acquire 100% of Staminier and since that would cause a change of control of Staminier, Staminier will be seeking the consent of the investment fund for that to occur without triggering the requirement to immediately repay the money - it is likely that such consent would be conditional on GreenBank assuming Staminier's obligations under the loan agreement.
The board said it is hopeful that the consent of the investment fund will be forthcoming but, even if it is not, they are confident that the acquisition of Staminier by GreenBank can be undertaken after a period of between 7 to 9 months under the terms of the agreement without requiring repayment or any penalty.
GreenBank and Staminier have informally agreed therefore to extend the exercise date for the option to accommodate the time needed to get the consent of the investment fund and, in the absence of such consent, such additional time as is needed to facilitate the exercise of the option at the earliest opportunity without triggering the repayment obligation.
The company noted that Terry Pullen, a director of GreenBank and also of Substantia, has joined the board of Staminier and Tim Stanton has resigned as a director of Staminier.
In a statement, David Lonsdale CEO of GreenBank commented: "I have been deeply impressed by the performance of Staminier since we bought our initial holding and am really pleased to confirm that GreenBank wants to complete the acquisition of Staminier - which 99.9% of our shareholders wisely voted for at our last General Meeting."
"The breadth of talent in the combined business will, in my opinion, enable us to achieve our core objective of becoming a global next-generation Merchant Bank with the well-publicized goal of being a sizable Nasdaq listed company," he added.
GreenBank non-brokered private placement was oversubscribed
Separately GreenBank, in a correction to a previous press release, noted that its recently closed non-brokered private placement was oversubscribed. Investors subscribed for 10,036,351 units for total proceeds of $4,516,35, an increase of $57,499 from the total disclosed in the company's March 31, 2021, press release, it added.
As a further correction, it said, in connection with the private placement, arm's length finders received total cash commissions of $85,987.50 (an increase of $5,625 from the figure disclosed on March 31, 2021), a total of 2,944 warrants as commission and a total of 17,500 units as commission. As a result of the private placement closing, there are now a total of 60,118,979 issued and outstanding GreenBank common shares.
Lonsdale commented: "The recent oversubscribed C$4.5m GreenBank placing, coupled with Staminier's C$17.1m fundraise means that the combined GreenBank/Staminier Group will be well placed to capitalise on the very substantial pipeline of opportunities that we are currently considering."
"I am also pleased to say that our strategy of blending "unicorn" investment opportunities with proven cash-flowing businesses and tangible asset growth is delivering increasingly robust value for our shareholders. Despite our re-rating over the last few weeks, it is worth reflecting that GreenBank's current market value is only approximately C$50M. We believe that, in due course, the market will increasingly recognise the benefits of the GreenBank next-generation merchant banking model and the rapidly increasing net asset value of the Group," he added.
GreenBank invests in undervalued exponential growth companies focused on building consistent capital appreciation for its shareholders. The company has a flexible low-cost overhead structure designed to maximize profitability.
Its management are based in Toronto, Dallas, New York and London and are used to working across borders remotely. The company's model of remote working, dynamic space and flexible contracts - rather than expensive offices, and large fixed costs - establishes GreenBank as a global merchant bank for the future, both during and after the coronavirus (COVID19) pandemic.
Contact the author at jon.hopkins@proactiveinvestors.com