afraid not. this is a unique case, first of its kind in Curacao. that said, in jurisdictions like this, typically they will follow the senior country’s legal system (ie, the Netherlands).
the minimum benchmark for valuation will be the offer price (64 EUR), adjusted for interest rates (ie the Curacao central rate, I think 2-3% at the moment), for the period during which your capital is locked up. then, the valuation will be calculated based on the reference date – which has not been set yet and likely won’t be set until the squeeze out hearing begins (this could be, earliest, July, I think, but more realistically sometime over the summer).
my point is simply that the ‘fair value’ as offered on Dec 12, 2020, is quite unlikely to be close to even a very conservative estimate of ‘fair value’ on Sep 1, 2021, given what is happening in the business; comparable transactions; end markets; and all the other evidence that will be presented to the Curacao court.
of course, Sonnenberg should realize this, hence the (supposed) motivation to pay up and settle now. but this is where we stand today.
Great letter Jeremy! Small recommendation from my side is I wouldn’t put the historical anecdote in the letter. It is very amusing of course, but there is a risk that it makes the letter less serious or credible. I know it isn’t but I’m saying some people may perceive it that way.
the bid has been raised to 82 EUR. the IC apparently asked for this given the lack of incorporation of the improved biz results since Dec12. So it appears our efforts have had at least some effect:
this fight is far from over. the revised bid values the company at ~5x run-rate EV/EBITDA (using $700mm which is very conservative), and 5.8x LTM EV/EBITDA versus direct comps (Springs Window etc) that are likely to trade in the market at >10x EV/EBITDA and other comparable business in the disclosed peer set that trade closer to 10x. i continue to believe true fair value is well in excess of 150 EUR/share, and that an independent court in Curacao is much more likely to see this valuation.
more to the point, the fact pattern here looks very bad now for the board/IC. they disclosed publically they had carried out their duties appropriately, even after the 4Q, and 1Q’21 results made clear the blatant expropriation of the offer. Only now with the likelihood of a zero tender acceptance rate are they pushing to raise the bid. The raised bid is thus simply to save face and makes nary a dent in the discount to fair value…and only demonstrates to the Court how pathetic their initial ‘process’ and supposed fair dealing claims were.
the fight continues. if anything changes i will update the board.
Thank you! Do we have any historical evidence on the Curacao’s courts’s attitude towards minorities defending their rights?
afraid not. this is a unique case, first of its kind in Curacao. that said, in jurisdictions like this, typically they will follow the senior country’s legal system (ie, the Netherlands).
the minimum benchmark for valuation will be the offer price (64 EUR), adjusted for interest rates (ie the Curacao central rate, I think 2-3% at the moment), for the period during which your capital is locked up. then, the valuation will be calculated based on the reference date – which has not been set yet and likely won’t be set until the squeeze out hearing begins (this could be, earliest, July, I think, but more realistically sometime over the summer).
my point is simply that the ‘fair value’ as offered on Dec 12, 2020, is quite unlikely to be close to even a very conservative estimate of ‘fair value’ on Sep 1, 2021, given what is happening in the business; comparable transactions; end markets; and all the other evidence that will be presented to the Curacao court.
of course, Sonnenberg should realize this, hence the (supposed) motivation to pay up and settle now. but this is where we stand today.
Notifications
Pirates. That’s my signal to double down.
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Thanks, Jeremy.
Great letter Jeremy! Small recommendation from my side is I wouldn’t put the historical anecdote in the letter. It is very amusing of course, but there is a risk that it makes the letter less serious or credible. I know it isn’t but I’m saying some people may perceive it that way.
notify
the bid has been raised to 82 EUR. the IC apparently asked for this given the lack of incorporation of the improved biz results since Dec12. So it appears our efforts have had at least some effect:
https://ml-eu.globenewswire.com/Resource/Download/a97c918f-967a-4adc-a448-4db362290b53
this fight is far from over. the revised bid values the company at ~5x run-rate EV/EBITDA (using $700mm which is very conservative), and 5.8x LTM EV/EBITDA versus direct comps (Springs Window etc) that are likely to trade in the market at >10x EV/EBITDA and other comparable business in the disclosed peer set that trade closer to 10x. i continue to believe true fair value is well in excess of 150 EUR/share, and that an independent court in Curacao is much more likely to see this valuation.
more to the point, the fact pattern here looks very bad now for the board/IC. they disclosed publically they had carried out their duties appropriately, even after the 4Q, and 1Q’21 results made clear the blatant expropriation of the offer. Only now with the likelihood of a zero tender acceptance rate are they pushing to raise the bid. The raised bid is thus simply to save face and makes nary a dent in the discount to fair value…and only demonstrates to the Court how pathetic their initial ‘process’ and supposed fair dealing claims were.
the fight continues. if anything changes i will update the board.
Amazing congrats so far!
Great job Jeremy, thanks!
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