Eclipx and McMillan Agreed to Terminate the Scheme Implementation Agreement

Eclipx Group Limited (ASX: ECX) and McMillan Shakespeare Limited (ASX: MMS) have mutually agreed to terminate the Scheme Implementation Agreement dated 8 November 2018. Further, ECX will pay $8 million to MMS for costs that MMS has incurred to date in connection with the Scheme Implementation Agreement and the proposed scheme.

Earlier in November 2018, both the companies had proposed to merge in a Scheme Implementation Agreement, to establish a leading salary packaging and fleet management company. However recently when Eclipx provided its trading performance and informed about the softening financial performance of the company and several other issues that the company was facing, McMillan decided not to go for the merger and informed Eclipx that it will not be able to complete the proposed scheme.

Upon completion of the Merger, existing MMS shareholders would have own around 64 percent of the Combined Group and rest 36% would have been with Eclipx shareholders. After three years of merger, the Combined Group would have realised an estimated $50 Mn in EBITDA run-rate synergies per annum.

However, now both the companies have agreed to terminate the Scheme Implementation Agreement with immediate effect. And both the parties are going to release one another from any claims relating to the SIA and the proposed scheme.

The payment of $8 million that Eclipx will make to McMillan is equivalent to 1.8 cents per ECX share (post-tax) and will be funded from operating cashflow.

The issues announced by Eclipx include a decline in Eclipx NPATA of 42.4 percent as compared to the first 5 months of FY 2018, various significant issues in the Right2Drive and Grays divisions and the impact of process errors which Eclipx has identified on past financial years. Eclipx also announced that it no longer expects to meet FY2019 earnings guidance provided to the market on 29 January 2019 and it won’t be able to provide the revised FY2019 earnings guidance.

In the recently released market update, Eclipx had confirmed that its Grays and Right2Drive businesses are for sale. And it announced that it has received interest from a number of parties regarding these businesses. The company also announced that it is targeting cost reductions of around $20m over the next 18 months.

ECX is planning to release its first-half results of FY19 on 24 May 2019.

Following the release of today’s announcement regarding the termination of the Scheme Implementation Agreement, ECX’s shares went down by 5.063% and MMS’s shares were down by 0.95% in the intraday trade.

In the past six months, the share price of Eclipx Group has declined by 70.19% as on 2 April 2019. At the time of writing, i.e., on 3rd April 2019 AEST 12:47 PM, the stock of ECX was trading at a price of $0.750 with the market capitalization of $252.51 million while MMS was trading at a price of A$11.995 with the market capitalisation of ~A$1.01 Bn.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

Top 25 Dividend Stocks report for April

People prefer a dividend stock in their portfolio as it possesses the feature of compounding. Compounding means that the earning which is generated through these dividend stock will get reinvested and will eventually create earnings from earning. More precisely, the dividend generated from these dividend stock will get reinvested to buy another set of a share of the dividend stock which results in giving a higher dividend.

Click here to download your top 25 dividend stocks report!

6 Cannabis Stocks under Investor’s Limelight…

Cannabis companies that sell both medicinal weed and recreational pot. Marijuana stocks to look at. Marijuana mergers and acquisitions. Dispensary data analytics. Upcoming marijuana IPO’s Those phrases have become increasingly common as marijuana legalization spreads.

Global spending on legal cannabis is expected to grow 230% to $32 billion in 2020 as compared to $9.5 in 2017, according to Arcview Market Research and BDS Analytics. As of June 29, 2018 the United States Marijuana Index, despite a lot of uncertainty around regulations, has over the past 1 year gained 71.49%, as compared to about 12% gain seen by the S&P 500.

Click here for your FREE Report