Dotcom’s Mega seeks $210m backdoor listing on NZX via TRS Investments
"I wonder if the NZX will require any details to be published or will it let the unsophisticated investor get sucked in."Featured comment
Mega Ltd, Kim Dotcom's data storage and encryption company, is seeking a backdoor listing on the NZX valuing the firm at $210 million.
Shell company TRS Investments, which has previously been looking at a back-door deal to list Cornerstone Mineral Corp, will buy 100 percent of Mega for $210 million, which will be satisfied by the issue of 700 million new shares in TRS to the existing Mega shareholders at 30 cents apiece, the company said in a statement.
It will also undertake a 148 for 1 consolidation of its existing share capital, leaving Mega shareholders owning 99 percent of TRS and adopt the Mega name. TRS shares were unchanged at 0.1 cents, valuing the shell company at $1.1 million.
The backdoor listing means Mega will gain a place on the NZX without having to release a prospectus or otherwise discose detailed financial information.
Dotcom staged a full-scale global media launch for Mega in 2012 to replace Megaupload, his previous venture which was shut down in a US-led operation that alleged the file-sharing firm and its owners had committed mass copyright infringement and money laundering of more than US$500 million.
Mega says it has around seven million users of its encrypted online storage service, but has been cagey about how many pay.
Former Mega CEO Vikram Kumar told NBR the new file sharing service has "a few thousand" subscribers who have paid for extra storage space (the first 50GB of online storage is free).
As a point of contrast, US-based online storage service Box filed for a $US250 million today. Box boasts 25 million registered users and 34,000 paying organisations.
This week Dotcom and his co-accused, Finn Batato, Mathias Ortmann and Bram van der Kolk lost a bid in the Supreme Court to access US government evidence against them ahead of the extradition hearing.
Mega's existing shareholders include Dotcom's wife Mona, who owns 26 percent of Mega via MD Corporate Trustee Ltd, followed by Wolf Ortmann with 18 percent, and Michael Sorensen via VIG Ltd with 11 percent, according to Companies Office filings. John Schollum, via Hobson Street Holdings emerged as a Mega shareholder this week with a 2.3 percent stake.
Dotcom stepped back from a hands-on role at Mega last year, resigning as a director in August to focus on his extradition hearing, music streaming website and political aspirations via the Internet Party. He doesn't hold any directorships in New Zealand, and his only direct shareholding is in RSV Holdings.
The deal needs approval from TRS shareholders, and is conditional on regulatory approvals.
TRS's biggest shareholders are Paul and Lynette Choiselat, who own 73 percent of the company.
TRS and Cornerstone Mineral Corp ended their talks, with the mining company instead eyeing the new NZX market being touted for small and medium sized companies.