“Ideally the board would be able to sell retail, wind Renaissance up and distribute funds to shareholders. As I write, we are still some way from achieving that goal.”
That’s the damning verdict of struggling Renaissance chairman Colin Giffney, who outlined the company’s bleak future to shareholders via NZX yesterday.
After accepting a proposal to sell the company’s subsidiary, the Yoobee School of Design Limited, to Academic Colleges Group Limited (ACG), the board of directors is hoping to persuade shareholders to green light the deal in a bid to recoup their investments in the business.
Conditional on shareholder approval, Giffney and the board have called a Special General Meeting for shareholders to consider the proposal on January 29, recommending investors vote in favour of the deal.
“Your directors have not made this decision lightly,” the shareholder letter reads. “Considering all the issues facing Renaissance, we believe this course is in the best interests of all shareholders. There are many factors behind the decision.
“At its core, directors are charged with delivering value to shareholders. Selling YSD is seen as the quickest and most certain way of achieving this.
“For some time there had been a substantial gap between our share price and underlying value of our business. Only the prospect of this sale has exposed that gap.”
With Renaissance’s struggles in the market well documented following a disturbing annual loss of $1.6m last year, if the deal doesn’t go ahead, Giffney warned shareholders of the implications.
“The alternative to a sale is to carry on as we are, resolve the issues facing our retail business and establish YSD as a small public listed company in its own right,” the letter continues.
“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.
“It could take 2 years or more for the share market to attribute the value to shareholders offered now by this sale (if at all).
“For those reasons the board agrees it is in the best interests of shareholders to accept the ACG offer and recommends you support the proposal to sell.”