I call BS, they're just kicking the can down the road with more lies. That's the problem with lies. If you don't address them early, you just end up digging yourself a bigger hole.
Look at the facts. You'll either believe Nigel or realize we've been constantly lied to and treated with disdain.
Conditions from the Term Sheet
- In the event that the Term Sheet is terminated by AVZ, by Locke on the basis of due diligence, or the formal agreement is not executed by 31 March 2024 AVZ must pay Locke’s reasonable costs in relation to the Transaction capped atUS$200,000.
- A break-fee of US$1,000,000 is payable to Locke by AVZ in the event that AVZ terminates the Term Sheet at any time.
They’ve just pushed the dates back for the DD, but the overlapping fees if AVZ decides to terminate don’t make sense—both conditions could hit simultaneously, adding up to $1,200,000. If this deal was real and AVZ wanted out, they could just avoid cooperating during due diligence, let Locke pull out and skip the $1,000,000 break fee. These kind of unprofessional and confusing conditions makes it even more likely this was just a ruse to get votes at the AGM.
Honestly, the Term Sheet looks pretty half-baked and seems like it was thrown together in a hurry, it was announced 5 days before the last AGM, maybe to hold onto power. If that was the plan, I get it, sometimes you do what you need to when the enemy is at the gate. They were obviously worried enough to engage telemarketers to check in with shareholders on their voting intentions, it makes sense they wanted a little extra backup with this sketchy funding announcement.
The fact that there's no history of Locke providing any deals, not one!!, related to litigation funding supports the argument that this deal was never going to happen. While I get that management might have panicked and wanted extra assurance for the vote, they should have shut this down quickly after the AGM. If all the statements about the Locke deal over the past eight months were lies, it casts doubt on everything else they've told us. If this is the case they need be held accountable, or moved on.
AI isn’t perfect, but I was curious so I ran the Term Sheet agreement through and asked it, "Does a $1,000,000 break fee seem excessive for this type of funding agreement?" The answer was pretty interesting!Industry Comparisons
- In industry practice, termination fees during the due diligence period are usually modest and designed to cover reasonable out-of-pocket expenses, typically ranging from a few thousand to a few hundred thousand dollars, depending on the complexity and scale of the due diligence activities.
Conclusion
The inclusion of a $1,000,000 termination fee during the due diligence period is unusual and raises several concerns:
- It appears excessively high for this stage of the process.
- It could be indicative of an attempt to prematurely bind AVZ to the deal.
- It suggests a lack of balance in the agreement, potentially reflecting insincerity or a strategic move to give the appearance of progress to shareholders without genuine intent to proceed.
