8990 Holdings kills its FOO due to “current market volatility”
8990 Holdings [HOUSE 10.42 1.17%] [link] put out an “[Emergency]” disclosure on Tuesday to effectively end its bid to conduct a follow-on offering (FOO). HOUSE had originally planned to sell 1.4 billion common shares for up to P18.99/share, to raise nearly P27 billion in what was referred to as a “re-IPO”.
The vast majority of the FOO was secondary, and most of that was being sold by HOUSE’s equity investors, TPG Rafter Holdings and Khazanah’s Pasir Salak Investments, in order to exit the position that they took in order to help take the company public in 2014 using a backdoor listing.
The company said that it and the selling shareholders “exerted diligent and good faith efforts”, but also noted that the market has fallen over 12% since HOUSE signed the registration statement for the FOO, name-dropped the pandemic, and brought up the inflationary pressures of the Russia/Ukraine conflict as reasons for why the parties were not willing to go forward.
HOUSE asked the SEC for a “credit” on the P7.3 million in paid in filing fees for when HOUSE re-submits a FOO application (or “any other application”) with the SEC in the future.
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It probably isn’t insignificant that HOUSE’s stock price has dropped over 26% in the past few months, and is currently trading well below its COVID-crash low of around P12/share.
It’s not weird that HOUSE’s equity investors want to get out; many of these investors scan the markets looking for medium- and long-term flip opportunities, but aren’t interested in actually running the investment targets indefinitely.
They add value through capital injections, they increase the reputation and governance of the organization by taking seats on the board, and then they look to sell their stake to a strategic partner (someone in it for the long-term) or get out by selling their shares as part of an IPO.
This is what happened with Converge [CNVRG 21.40 1.83%] and its American partner, Coherent Cloud.
All that said, it sounds like HOUSE’s equity investors aren’t as rabid to exit as Coherent Cloud was with CNVRG, so they’re willing to wait a bit to get a better valuation.
Coherent Cloud was “imma head out” almost as soon as they could, and the resulting dump of shares has been a challenge for the CNVRG ownership group and has materially impacted the stock price this year.
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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