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Yellow Brick Road Holdings Limited – the mortgage broking group that includes major brokerage franchise Yellow Brick Road (YBR), aggregator Vow Financial, and non-bank lender Resi – has confirmed that it is making a “strategic decision” to make the company private again.
The group, which was founded by executive chairman Mark Bouris, has been publically listed since 2008. It has four major shareholders, including Magnetar Capital LLC, Sandon Capital Investments, Nine Entertainment Co, and interests associated with Mark Bouris Family Company Investments (YBR’s largest individual shareholder). They collectively make up more than 60 per cent of the group’s shareholding.
However, YBR submitted a formal submission to the Australian Securities Exchange (ASX) on Thursday (14 September), in which it requested to delist.
It confirmed on Monday (18 September) that it is seeking to be removed from the official list of the ASX and will be undertaking a minimum holding share buyback for those who hold less than a marketplace parcel of shares in YBR (i.e. a shareholding valued at less than $500) to “assist them to exit their YBR shareholdings before the delisting, if that is their preference”.
According to the group’s executive chairman, Mr Bouris, the decision to remove from the official list comes as the board believes its trading price does not reflect its underlying value and is an impediment to YBR raising capital; that the current spread of shareholders limits trading and liquidity; that the share price means raising a material capital amount would be “highly dilutive” to shareholders and further depress the share price; and that a significant proportion of time (and money) is being spent on ASX matters that could be redistributed elsewhere.
Mr Bouris commented: “I have just spent a few days at our annual residential mortgage conference with hundreds of our franchisees, brokers, and delegates.
“The overwhelming response has been strong support for the delisting strategy and the flexibility and savings it brings to the group.
“Generally, everyone is very positive about our future as both a branded mortgage and aggregation group.”
Speaking of the move, Gabriel Radzyminski, the chief investment officer of Sandon Capital Investments, said: “The delisting strategy is an important step in the future of the Yellow Brick Road Group.
“We are excited about the future developments for this uniquely positioned, well-branded distributor of what is a basic consumable for Australians, their mortgage.”
The delisting proposal is expected to be considered at an extraordinary general meeting of YBR shareholders on or around 24 October 2023. If the move is approved by shareholders, it is expected that the removal from the ASX will take place in late November 2023.
YBR is also offering eligible shareholders the opportunity to apply for up to $30,000 worth of new fully paid ordinary shares (new shares) at $0.055 per new share between 25 September and 16 October 2023, without incurring brokerage, commissions or other transaction costs. The cost per share reflects the same price as the volume-weighted average sale price of YBR shares traded on ASX over the last five ASX trading days.
There will be a cap of $2,000,000 on the total amount to be raised (and maximum number of shares to be issued under the SPP is 36,363,636 shares), representing 11.1 per cent of the company’s current issued capital.
[Related: YBR settled $4bn in 4Q23]