So CCV announce Ezicorp deal is off. There are a lot of posters outraged by the Labor Government's legislative ambitions to end highly profitable payday lending, and some feel that Ezicorp is taking advantage of the scare to perhaps buy the whole company somewhat cheaper.
As for Govt. they have been beating the war drum for some time, so whilst unpleasant for shareholders this is hardly a surprise.
As for Ezicorp, they have their own shareholders to look after, a fiduciary duty, and the deal was structured with a material adverse change clause and this is without doubt a material adverse change. So I see them doing what they should do.
Now for CCV management. Not one poster has apportioned any blame to them. Well have a look at the original scheme document which was posted with the announcement in March 2011. Check the timetable for the deal. The second court date for the scheme was estimated to be 24 June 2011. The significance of this date is that this is the day that the material adverse change clause expired and Ezicorp could no longer rely on an out for a negative development. The reason that the timetable was not met was that CCV had been negligent of its regulatory requirements with respect to its London listing. So when pulled up on this they then set about a long process to put right what they had previously overlooked. If it had not been for their ineptitude then this deal would have already been done well before this recently announced proposed legislation. So put bluntly, the fact shareholders have missed out on selling some of the shares to Ezicorp for 91 cents, is because CCV management stuffed up. Blame them.
As for CCV's comments re earnings impact, I'm surprised the ASX will accept what they have advised the market. Basically they say no change to market estimates this year because changes are proposed from 1 July 2012, well yes we can work that out, then they get really obscure re what they will do beyond this date (assuming legislation gets up) to mitgate effects of legislation. It sounds like they are charting a course which may not be within the spirit of proposed legislation. Look out they are asking for real trouble if they seek to get cute with legislators ( dont they need to be licensed, lets hope they dont lose their right to trade!)
I have not done the exercise but would suggest that the base value of the group should be to take the net present value of the assets of today, plus after tax FY2012. Any value on top of that is dependent upon UK earnings vs restructuring costs in Aust and Corporate (including store closures, redundancies, lease terminations etc).
Could get interesting over the next couple of weeks as instos decide if they hang in or flip at any cost. All the while Ezicorp will watch on the sidelines with their assessment of value held close to their chest.
Good luck all.
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