Sargon Capital has agreed to acquire 100% of Australian fintech company Decimal Software for 1.41 cents cash per share by way of a Court approved scheme of arrangement.
The cash consideration of 1.41 cents per Decimal share offered under the Proposal represents a 76% premium to the last closing price of Decimal shares of 0.8 cents, and a 35% premium to the 30 day VWAP of Decimal shares on ASX prior to the date of this announcement.
Sargon is a private company that provides financial institutions and entrepreneurs with the technology and infrastructure they need to successfully build and grow investment funds and financial products.
Decimal chairman Mark Potts said: “The Sargon proposal provides certainty of value to our shareholders.
“A unanimous decision was made by the Board at the conclusion of a thorough and comprehensive process into finding the best commercial outcomes for the Company.
“In Sargon, Decimal has a partner that shares our vision for the future of digital advice products and is prepared to work closely with the Decimal team, within an evolving regulatory framework, to realise that vision for the benefit of our current and future clients.
“Most importantly, Sargon brings deep technology and operating experience across trustee services, and a well-capitalised balance sheet that will allow Decimal to further penetrate the market and continue to build out its product offering.”
As announced on 16 July 2018, over the last few months the Board of Decimal has undertaken a strategic review to assess the most appropriate commercial and financial structure from which to capitalize on Decimal’s digital advice platform.
As part of the strategic review process, Decimal and its advisers have engaged with a wide range of parties in a competitive process to determine their potential interest in financing or acquiring Decimal or its business.
The review was conducted against a backdrop of considerable uncertainty and volatility in the Financial Services sector, including the ongoing Royal Commission.
Following completion of the strategic review process, the Board of Decimal has determined that the Proposal is superior to all other currently available alternatives.
As such, Decimal has entered into the SIA so as to provide all shareholders with the opportunity to consider the Proposal.
The Decimal Board unanimously supports the Proposal and each director intends to recommend that Decimal shareholders vote in favour of the Proposal subject to no superior proposal emerging and the independent expert appointed to consider the Proposal concluding that it is in the best interests of Decimal shareholders.
Subject to the same qualifications, the Directors intend to vote, or cause the voting of any Decimal shares in which they have relevant interests, in favour of the Proposal.
The Directors have appointed RSM Corporate Australia Pty Ltd (“Independent Expert”) to prepare the requisite independent expert’s report in relation to the Proposal.
That report will be provided to Decimal shareholders in the scheme booklet which is expected to be dispatched to shareholders in early November 2018.
Key Conditions for Implementation of the Proposal
The Proposal is subject to a number of conditions, including:
- Decimal shareholder approval (requiring approval of a majority in number of Decimal’s shareholders voting and approval of shareholders who represent at least 75% of the total votes cast, in each case either in person or by proxy);
- Applicable regulatory and Court approvals to the Proposal being obtained;
- The Independent Expert opining that the Proposal is in the best interests of Decimal’s shareholders;
- Key Decimal customers consenting to the proposed acquisition of Decimal by Sargon and the extension of the term of their existing contracts for a minimum of 12 months post-implementation of the Proposal;
- Repayment of amounts owing under the R&D rebate facility, in full, out of R&D rebates expected to be received from the ATO in November;
- Cancellation of all outstanding Decimal options, which are out of the money, for nil consideration; and
- No material adverse change occurring.
Full details of the conditions of the Proposal are set out in the SIA, a copy of which is attached to this announcement.
Interim Funding Agreement
Sargon and Decimal have entered into unsecured loan agreements, pursuant to which Sargon has agreed to make available to Decimal interim funding facilities of up to $600,000 at an interest rate of 8% p.a.
Amounts drawn down under the loan facilities are repayable between January and March 2019. The unsecured loan agreements are separate to the Proposal and cannot be terminated by Sargon in the event the Proposal is not implemented.
As at 20 September 2018, Decimal has not drawn down any amounts under the loan agreement.
Source : Company Press Release