A follow-up to last weekend’s item on sleepy investment company Excelsior Capital and its huge $100m windfall from selling its electrical cables business that will soon fill the micro-cap’s bank with piles of cash. That’s a lot of hot money looking for a home.
The ASX-listed Excelsior is controlled by Leanne Catelan, who owns 51.33 per cent of the company and is the daughter of the late property data mogul and RP Data founder, Ray Catelan.
Catelan recently sold her Potts Point, Sydney, grand Italianate mansion “Bomera” to steel tycoon Sanjeev Gupta for $34m and now runs Excelsior as a type of listed investment company.
Late last month Excelsior announced a huge deal. It would sell its electrical cable division, called CMI, to IPD Group for as much as $101m – which needs to be put into the context of Excelsior’s total market capitalisation that only sat at $79.75m the day before the sale announcement was made. Excelsior also owns a small investment portfolio worth $22.98m, of which $17.83m is held in cash. It has access to tax losses of about $32m, which can possibly be used against any capital gains on the CMI sale.
Now, this week – and only two weeks after the CMI sale deal – Excelsior put out its latest net tangible asset (NTA) backing for the month of November. And it has many shareholders scratching their heads.
The NTA report has the CMI business valued at only $1.1565 a share. But hold on, say minority shareholders, the company knows the real value of the electricals business because it has an agreement to sell it for $101m ($92.1m in cash upfront, with a further $8.9m to be paid later).
A back-of-the-envelope calculation, based on just the $92.1m in upfront payments, would give the electrical cable business an NTA of $3.175 a share. If earnings hurdles are met and a further $8.9m is handed over, then the full NTA of that business is more like $3.48. Then there is the portion of CMI’s profits that Excelsior should be able to keep before it officially hands over CMI to IPD Group.
Many believe then the real NTA for Excelsior – including its small cash-heavy investment portfolio – is between $4.05 and $4.35, against what Excelsior disclosed in its ASX statement of a total NTA of $2.0315 a share.
Sure there could be some capital gains tax payable on the CMI sale, but it is believed that CMI has a book value of about $25m. Throw in $32m of retained tax losses it can possibly offset against that and the tax payable on the sale is probably pretty small.
Why Excelsior, run by Catelan and its chairman, Sydney lawyer and former partner at Gilbert & Tobin Danny Herceg, would want to downplay the real or fair value of the company is unclear. No one says you need to over-do it guys, but c’mon, getting closer to fair value would be ideal, wouldn’t it? Or why not give shareholders some parameters of the maximum and minimum NTA for CMI based on unaudited accounts.
Usually, companies love to boast and overplay the value of their company and assets, and Excelsior could be the most sheepish company on the ASX.
Catelan and Herceg did not return calls to Margin Call. They were reportedly last seen hiding under a bushel.
Still waiting on case
As the year draws to a close and the Christmas trees bake in the sun, the Federal Court of Australia will also soon shut its doors for the holiday break.
But despite the nearly 10 months since the barnstorming trial that was the troika of Westpac, SMBC and Societe Generale vs. the former Forum Finance figures Bill Papas and Vincenzo Tesoriero, no judgment has yet landed.
Justice Elizabeth Cheeseman, the third in a line of jurists to hear the hot mess that was the Forum Finance fight, is yet to deliver her verdict.
Readers may remember the Forum Finance alleged fraud as one that may rank among the largest bank schemes ever to defraud the country’s financiers.
A low estimate of $300m vs. a high guess of almost $500m was allegedly squeezed out of Westpac, SMBC and Societe Generale, along with a scattering of other minor lenders.
The court heard the alleged fraud scheme was concocted by Papas, a former patron of A-League team Sydney Olympic, in his notebook with such steps as “escape overseas” and “tell Vince everything” among the big brain plans put by the former printer rental mogul.
Viewers of the case may have missed the NSW Fraud Squad members diligently watching the case grinding through the courts.
But this column can assure Papas and Tesoriero NSW Fraud Squad is, just like us, watching and waiting for Justice Cheeseman.
A NSW police spokeswoman noted the inquiry with the State Crime Command Fraud Squad “remains ongoing”.
It appears the lingering uncertainty about the judgment hasn’t got to Papas or Tesoriero, who by all accounts have got on with their lives.
Tesoriero was forced to sell his house in the Melbourne suburb of Hawthorn, after lenders moved in on the property amid a continued freeze on his accounts.
Meanwhile, Papas appears content to stay far away from Australian shores, despite earlier promises to Justice Michael Lee he would return.
Papas, who allegedly used his ill-gotten gains to buy Greek soccer team Xanthi, is now watching his dreams of Superleague domination evaporate as the liquidation of the team takes hold.
Our Greek friends have pointed us to papers showing that a hearing is set down for January 10 to kick off the wind-up of Xanthi after liquidators were appointed on November 16.
From the looks of the notice, Papas is continuing to enjoy the sights of Athens’ port suburb Piraeus, where he’s been known to enjoy the beach alongside members of the family who’ve come to visit. We doubt we’ll see him soon.
Hiro to zero
It seemed like a good idea at the time. Amid the health and wellness craze, roll up some personal care brands into a corporate vehicle, attract some high-profile company directors, maybe some early shareholders from wealthy families and family offices, and float it on the ASX.
What could possibly go wrong? A lot, it seems, and now the once highly publicised Hiro Brands, which promised for a long time to list on the ASX, has been hit with winding-up orders, according to ASIC documents, and its directors are leaving.
Hiro Brands was backed by Paul Docherty, a significant powerbroker in Australian rugby union as chairman of the Melbourne Rebels and a well-connected businessman. He got on the board at Hiro the likes of former Myer chairman Garry Hounsell, and backing from veteran director Lyndsey Cattermole. In pre-IPO funding rounds Hiro reportedly got backing from parts of the Myer family and former EBOS Group chief executive Pat Davies. It was also heavily supported by BRC Capital. The former chief executive of Patties Foods, Steven Chaur, was in place to run the personal care roll-up.
Now those dreams have turned to ash. According to ASIC documents, Hiro has been hit with a winding-up order and Hounsell and Cattermole have resigned as directors.
Docherty didn’t return phone calls.
Dragonfly pulls float
Speaking of pulled floats, Dragonfly Biosciences, the UK-based maker of cannabidiol-based supplements, has dumped its plans to list on the ASX as it fights off a lawsuit brought against it by a former director who once worked on The Muppets. True story.
The biotech was hoping to raise money from the public to value the company at about $95m, but then it was that old classic story of a former pornography executive, a Dancing with the Stars Bulgaria celebrity and lawsuits from a guy who worked on the Muppets – you know the drill.
Dragonfly Biosciences’ two largest shareholders are Bulgarian television personality Radost Draganova and broadcast entrepreneur Chris Wronski, who once ran European pornography outfit Sapphire Media – later sold to Hustler publisher Larry Flynt Productions.
Its CBD product, derived from cannabis plants, has gained popularity for treatment for numerous maladies including anxiety, chronic pain and insomnia.
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