With several current M&A bidders trying to squirm their way out of Schemes and Agreements done just before the Covid 19 events it is important to consider whether this deal is still open to similar attempts to avoid the terms and terminate it under a "material adverse condition (MAC)" clause some time before the sunset date. With the worst of the Covid 19 events appearing to be behind us it is easy to think that those problems have been considered within the context of the Scheme and MAC conditions need not be considered. This is given some credence in that they are looking at a binding agreement with no financial conditions and no due diligence effects. Then there is the Sargon debacle - what if there is a claim against monies already paid on the Sequoia deal? Some comfort can be gained from looking at P55 of the Scheme Agreement. The heading is Exclusions from Target Prescribed Events. Under clause B it reads" in respect of the events in clause 19 it is a claim of any third party to the proceeds of any Sargon Sale Facility disclosed in the Disclosure Materials". So as long as OVH have fully disclosed their dealings and proceeds received under the Sargon receivable claim then the Scheme is unaffected. While there could be a second wave of Covid 19 which might cause consideration of a "MAC" outside of those listed it would seem that the risk is low. IRESS seem to have considered all of that. However I have been involved with CGR holdings in the Scotpac/CGR Scheme which fell over and it does make you wary.
OVH Price at posting:
24.0¢ Sentiment: None Disclosure: Held
