A manufacturing success story
We have achieved outstanding results for an ASX-listed producer of metal alloys.
Building a strong framework
Initially we advised the company’s board on corporate governance matters, ensuring that the enterprise had robust, endurable systems to support an anticipated phase of expansion.
The next step was to advise and act for the company in its acquisition of a subsidiary of another ASX-listed company. This acquisition represented a range of special challenges: the subsidiary was based in Europe and had its own subsidiaries in European countries and in Asia.
The acquisition was an ambitious goal because the target was almost the same size as our manufacturing client, making the acquisition and integration a substantial task. Furthermore, the subsidiary’s parent company was anxious to sell as quickly as possible, so we had to structure the deal in a form which did not require advance approval of our client’s many thousands of shareholders.
We advised on the commercial terms, acted in all of the negotiations leading up to the agreement and helped our client find a way through the maze of Listing Rules, avoiding the need for prior approvals which would have caused long delays and would probably have caused the deal to fail.
As a result of the acquisition, our manufacturer client is now in a much healthier position. Its share price has risen and it is now large enough to buy other companies, using its shares as consideration.
We are now helping the company to conduct another capital raising which will lead to further acquisitions. Our client is now well positioned to become a global player in its niche.
Unlocking the wealth in a family business
Our client, a prominent glass manufacturer, was a family business whose founders had decided to sell a majority shareholding in the company to a private equity fund.
The task was to help our client find a way around all of the pitfalls associated with selling a majority stake to an institutional shareholder and losing control of the enterprise, while still maintaining involvement in the business as a minority shareholder.
Business sale in difficult times
The sudden and radical shift in market conditions in 2008 added an additional layer of complexity to this transaction.
A particular challenge was to arrange payment to our client for the shares, because refinancing was necessary post completion and options were limited in the prevailing economic climate.
We were involved in the transaction from the outset, from the initial terms sheet, through to completion and then the post-completion phase. We negotiated favourable terms, obtained payment for the stake in the company and protected the family from losing its investment.
We are now negotiating the sale of the family’s remaining stake in the company and managing the founders’ exit from the business in a way that has maximised their returns and minimised their risk.
Corporate governance case study
Swaab’s corporate lawyers recently assisted a technology start-up company which had grown in size and acquired a significant number of shareholders. The next anticipated step was to look for capital and to raise the company’s profile, with a view either to listing or to negotiating a trade sale.
The board was in the process of deciding whether the existing directors had the necessary skills to govern the company, or whether there was a need to invest funds to bring in independent directors to ensure that the company could be run in the way that shareholders were demanding.
An unfortunate side effect of the company’s growth was the development of a dispute between rival groups of shareholders about the company’s future direction. We assisted the board with advice on how best to manage the conflict, deal with shareholder communication and deliver on shareholder objectives.
Putting the house in order
The next stage was to look at the practical matters of company secretarial work, such as board minutes, resolutions and shareholders agreements. We then went on to assist the company to improve its governance practices by developing policy documentation and procedures.
This laid out the groundwork enabling the company to become self-sufficient in managing its own affairs. Part of this work involved formalising corporate governance systems so that the company could avoid shareholder disputes and other problems in the future.
Attractive investment target
Having helped the company put its house in order, we worked on a major capital investment by a significant Asian private equity fund which was intended to be used to finance the next phase of the company's evolution.
For anyone considering any type of investment in a company, being able to see that the company has a professional and effective governance regime is a big selling point. It inspires confidence in even the most sophisticated investors.