Ann: Termination of White Label Agreement, page-24

This is an interesting one for me to digest today. ABB’s margins on this contract with origin was getting squeezed and deteriorating with each year from what they have announced. $14m this year, $10m next year and less again in future years. That is not a good outcome for ABB. This contract going to SLC resulted in ABB losing $10m next year and potentially less again in the year after, but on the flip side they just gained ~$25.5m value on their SLC holdings.


Having a gander at the SLC deal and at first glance it seems SLC have just given away ~$25.5m in shares at todays close price so in reality the first year’s $19m figure is more like -$6.5m and depending on the other milestones there’s another $30m which can be siphoned by ORG giving up far more of their annualised $19m EBITDA over the next 6 years! They had better be increasing that $19m/yr number as the years progress because as it currently stands it looks like $114m EBITDA over 6 years runs at the cost of potentially diluting shareholders by ~$55.6m in script - almost half that profit given back! Surely that $19m figure grows handsomely as the customers through origin grow, otherwise this deal looks far less attractive than it looks on the surface.

Honestly comparing what ABB have disclosed and what I can see with SLC’s new contract, it does not seem like much of a difference in true pricing except far more upside for Origin going with the SLC deal due to the script contingent. Imagine ABB selling their share of SLC to Origin once Origin gain their potential ~20% holding. This smells predatory from Origin