Mpire plans backdoor listing, again

26/03/2015 - 12:16

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Perth entrepreneur Zhenya Tsvetnenko has announced plans for a backdoor listing of his online advertising business Mpire Media, two months after an earlier, more generous deal was terminated.

Mpire plans backdoor listing, again
Perth entrepreneur Zhenya Tsvetnenko.

Perth entrepreneur Zhenya Tsvetnenko has announced plans for a backdoor listing of his online advertising business Mpire Media, two months after an earlier, more generous deal was terminated.

The new deal is with Fortunis Resources, and is the sixth backdoor listing announced by a Perth-based exploration company in the past two weeks.

Mpire Media’s first deal, announced in July last year, was with Lithex Resources. After several extensions and variations, the deal was terminated in mid-January.

Since then, Mpire Media has achieved rapid growth in monthly revenue, from $55,000 in July to $1.15 million in February.

Despite the growth in Mpire’s revenue, the new deal puts a substantially lower valuation on the business.

Fortunis will issue 10 million shares to pay for the acquisition of Mpire. At today’s price of 31 cents, that values Mpire at $3.1 million.

In addition, it will issue up to 5 million shares to Mr Tsvetnenko, to repay a $1 million converting loan that he has advanced to Mpire.

A further 1.5 million shares will be issued to the unnamed consultants who put together the backdoor listing deal.

Fortunis also plans to raise at least $2 million and up to $4 million in fresh capital.

On top of that, the transaction involves the issue of 12.5 million performance rights and 7.5 million options to the vendors and key management at Mpire.

The terms of the Fortunis deal are markedly different from the earlier Lithex deal.

Lithex planned to issue 23.5 million shares with a deemed value of $4.7 million to acquire the Mpire business.

It also planned to issue 66.5 million performance shares, and undertake a capital raising of at least $7 million.

In the Lithex deal, conversion of the performance rights was tied to growth in Mpire’s revenue.

In the new deal, Fortunis has set what appears to be a tougher hurdle - the conversion of most of the performance rights will occur only if Mpire achieves a cumulative pre-tax profit of $1.5 million over the next two years.

Mpire is run from offices in Perth and Toronto, and describes itself as an intermediary between its advertiser clients and its network of affiliates that deploy digital advertising and marketing campaigns to consumers.

It was established in 2006 and originally focused on servicing businesses associated with its founder.

Since the middle of last year, it has pursued opportunities outside the Zhenya Group - in February, it acted for 73 advertiser clients.

As a performance-based business, it earns a commission only when defined results are achieved, such as a product sale or download.

Fortunis shares jumped 6 cents today to 31 cents.

Over the past week, the stock has jumped from 20 cents per share.

The Mpire proposal follows the successful backdoor listing last year of Mr Tsvetnenko's Bitcoin business Digital CC.

 

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