SurfStitch "exploring sales of its media
assets."
Oh, to have a bug under the boardroom table at leisure
empire Surfstitch this week. With the company’s
shares scraping along the bottom of the ASX like a stray driftnet,
bumping off heads of coral at near penny stock valuations (seven
cents at last refresh), the embattled board are fending off the
hordes on myriad fronts.
To the north, the barbarians from Quinn Emanuel Lawyers are
lining up trolleys full of lever-arch folders in preparation for a
bloody class action lawsuit.
To the south, those infidels from Gadens are also preparing for
jurisprudential bloodshed.
The silks claim that SurfStitch (which has the ASX code SRF)
owes investors more than one hundred million Australian dollars in
compensation for misleading and deceptive conduct (not to mention
breaching its continuous disclosure obligations).
Simply, investors are pissed that the board told them in 2015/16
that the company was worth more than a pile of leggies and a rack
of last season’s steamers.
The action seems a tad quixotic, given that the entire battered
shell is now valued at less than twenty million. But what would
stock spruikers and hedge funds and short sellers know about
running a surf biz?
As the gavel hovers above their heads, SRF’s board has said it
wants to settle “within a reasonably short period of time” on terms
that basically will not sink the entire vessel.
“Whether that is achievable will, to a large degree, depend upon
the cooperation of third parties, including the class action [law]
firms and litigation funders,” the company said in a dire market
announcement yesterday. “The requirement to manage two class
actions, in different jurisdictions, with overlapping claims, is
likely to make it more difficult to bring the matters to a
controlled outcome.”
Indeed.
That’s business-speak for… fuck!
So how does SRF intend to fund these court battles? Are they
ready to lift the lid on a war-chest full of purloined silver and
gold coins from the strategic acquisitions they’ve made over the
years?
Well, not exactly.
The best plan the board could come up with this week was to flog
their lucrative media assets, Stab and Magicseaweed. Is that
not raiding the crown jewels to fend off the marauding
villagers?
“In the light of the challenges facing the business, the company
is exploring sales of its media assets and the potential for sales
of other assets,” the board told white-knuckled investors.
Now a little background.
SRF, with canny foresight into the value of a Red Bull-style
vertically integrated synergistic media-product empire, paid a
mere $13.8 million and 4.8 million shares for Magicseaweed and
Stab magazine in the heady days of the 2015 Asia-Pacific surf media
publishing bubble.
Granted, those precious 4.8 million pieces of scrip are now
worth a princely A$336,000, but that’s beside the point. Surf media
is bouncing back, dammit, and now is not the time to jettison those
assets like captain Ahab trying to keep his trusty galleon
afloat.
So, what’s your opinion on the SRF board’s litigation and
solvency strategy?
Do you think they should save Magic Stabweed?
Should they instead move their headquarters to Venice Beach,
file for Chapter 11, and come out shining like a debt-free American
phoenix a la Quik?
Should they hunt down the handsome blond twin
and tell him all is forgiven? Would he be able to steer SurfStitch
back into calmer fiscal waters?
Should they post their swipe cards to the former Macbankers who
came up with this cunning ruse, and suggest they take back the
helm?
Or, better still, should the brunette brethren drive the share
price down even lower, before blondie rides in leading a “white
knight” private-equity-backed takeover bid, thus relieving fellow
shareholders of the depressing sight of an SRF code every time they
log into Commsec?
And, more poignantly, do the hard-working scribes at Magic
Stabweed begrudge the fact that the board put them on the
chopping block instead of dumping that bunch of expired patents
masquerading as a fin technology company?
The drama. The excitement. The corporate manoeuvering. The
intrigue.
Etc.
