Renaissance sounds death knell ahead of meeting to sell Yoobee
Renaissance Corp ultimately plans to wind itself up once it sells its Yoobee School of Design and deals with its ailing retail business, returning capital to shareholders. The shares jumped 28 percent to 15.4 cents.
The company will ask shareholders at a special meeting on Jan. 29 in Auckland to approve the sale of Yoobee to Academic Colleges Group for a net $13.3 million, with a potential earn-out of up to $1 million based on 2014 earnings. Independent adviser KordaMentha considered the deal fair to the company's shareholders.
The sale comes after Renaissance failed to find a viable plan to deal with its retail business after "another terrible year in 2013," chairman Colin Giffney said in a letter to shareholders recommending the deal.
The proceeds will go towards repaying debt, and would leave cash reserves of about $7 million, most of which will be held to distribute to shareholders on the resolution of its retail issues.
Renaissance's board intends to sell the retail unit, wind up the company and distribute the funds to shareholders.
"As I write, we are still some way from achieving that goal," Giffney said.
Renaissance flagged the sale in October last year, saying its Yoobee-branded Apple only retail stores were no longer viable.
If the sale doesn't go ahead, Renaissance will have to deal with its retail unit and set up Yoobee as a small publicly listed company in its own right.
"In our view, if shareholders elect to reject the proposal, the share price will fall, perhaps quite significantly, until we have resolved the retail issues and, potentially, recapitalised Renaissance," Giffney said. "It could take two years or more for the share market to attribute the value to shareholders offered now by this sale (if at all)."
Giffney said the company has been hindered at times by its bigger shareholders who "openly expressed their preference not to inject new funds," which at times "would have made sense."
The board had "differing views on many of these issues" but agreed on "the material matters affecting Renaissance," he said.