As investors and the authorities weigh the pros and cons of the many reverse takeovers being proposed in Western Australia, there is at least one spectacular example of what can be achieved via the backdoor listing strategy.
As investors and the authorities weigh the pros and cons of the many reverse takeovers being proposed in Western Australia, there is at least one spectacular example of what can be achieved via the backdoor listing strategy.
Sitting on 320 per cent total shareholder return for the year ending February 28, specialist materials technology company Alexium International Group has had an impressive six months, climbing from around 10 cents per share to trade at 70 cents, valuing the business at $170 million.
A lot of that value has followed announcements that Alexium’s technology in safety and special military-use materials for clothing and other applications has been sold to manufacturers.
Late last month it announced an agreement with a major outdoor tent manufacturer for its Alexiflam-SYN flame retardant chemical, which it claims is not only durable and eco-friendly, but also compatible with water-repellent treatments.
This followed earlier news of developments with regard to military clothing.
Few have done as well out of the stock as director Gavin Rezos, holder of the single biggest beneficial interest, whose 21.8 million shares stake is currently worth about $15 million.
Alexium is really two counter-cyclical plays wrapped into one.
Alexium acquired the original technology in 2010 in a $10 million scrip-based transaction after Mr Rezos brought the deal to what was the shell of the former Evans & Tate Wines business. The US Air Force had developed the technology, but the private owners of the patents were struggling to continue development amid the carnage of the GFC.
“In the middle of the GFC there was no funding,” Mr Rezos said from Washington, DC.
“The founders called me to see if we could do something in Australia as I was known to one of their backers.
“We arranged the development funding and eventually moved the founders out from executive positions, amicably, so we could drive the business in a more strategic way.”
At that time, the Australian dollar was strong against most major currencies thanks to the mining boom, which also condemned technology stocks to live in the shadow of resources stocks.
As a result, in WA, for the past five years there has been little focus on Alexium as it continued to develop its technology.
With the sudden downturn in iron ore and oil, however, it appears the Perth-listed company run out of South Carolina has generated a surge of interest as it moves beyond development to commercialisation.
Mr Rezos is not the only beneficiary.
Alexium CEO Nicholas Clark has also done well from equity in the business over which he took executive control in 2013, moving to the US from Perth.
Mr Clark’s stake, now 5.8 million shares after a conversion of 3 million performance shares in December last year, puts him in the top five shareholders.
Alexium director Craig Smith-Gander, who has 1 million shares in the company, heaped praise on both Mr Rezos for finding such an acquisition when no-one else was looking, and Mr Clark for his management talent.
“Gavin had the guts in ’08-’09 to go and look for this sort of thing,” Mr Smith-Gander said.
“He is always looking for opportunities.”
He said Mr Clark, a former soldier who was educated at Guildford Grammar School, had been working with Mr Rezos on other ideas when he was promoted from his Perth-based CFO role.
“He lobbed in there and rolled his sleeves up and he has done a phenomenal job galvanising the team,” Mr Smith-Gander said.
The original vendors of the technology have retained a major stake in the business, but not the scale that was part of the original deal. Cayman Islands-based company Piper Buchanan holds more than 14 million shares, making it the second-biggest stock holder.
