Funtastic's latest plaything
Melbourne toy wholesaler prepares to raise $22 million, helping it to acquire a manufacturer from former director and stakeholder Nir Pizmony.
The fun continues at Funtastic with ASIC granting the toy company leave to push back its annual general meeting to June 30. This will allow the Melbourne-based toy wholesaler to finalise arrangements for an acquisition and a $22 million rights issue.
Funtastic is working out the details to acquire Hong Kong-based toy maker NSR (HK) from Nir Pizmony, the founder of JNH toys and a former director of Funtastic. The proposed acquisition is an interesting one considering the changes in the Chinese toy industry over the past two years after export recalls in 2007 and the global financial crisis.
The mooted acquisition also comes after Pizmony and Craig Mathieson (son of pub baron Bruce) joined private equity firm Archer Capital in an attempt last year to buy out Funtastic for $133 million.
Archer Capital, which has previously led successful buyouts for MYOB, Cellarmasters and Ascendia Retail – the owner of Rebel Sport and Amart All Sports – broke off discussions with Funtastic in August last year after the parties failed to agree on a purchase price, but remained a significant shareholder.
Later on, in December, Lachlan Murdoch appeared on the share register with his private investment vehicle Antium buying a 14 per cent stake. Murdoch, who launched a failed bid last year for Consolidated Media Holdings, said at the time that there were no plans to launch a bid for Funtastic. Murdoch's other private investment company Illyria has a stake in the Indian Premier League.
Murdoch, a keen classicist with a philosophy degree from Princeton, named Antium and Illyria after an Ancient Roman city and province respectively.
In the more prosaic world of children's toys meanwhile, it is Funtastic doing the buying. NSR manufactures toys and among its portfolio of licensed and non-licensed products has the global master toy licence for Noddy, the Enid Blyton character. NSR has projected sales revenues of $15 million for the 2009 calendar year, Funtastic said.
In February Funtastic outlined a proposed scrip-based acquisition plan for NSR, whereby a minimum of 10 million shares would be issued to the vendor at 13.5 cents each and NSR's bank and shareholder debts worth $5.65 million would be assumed.
It was proposed that Pizmony would rejoin the Funtastic board at the completion of the sale. Pizmony, along with Craig Mathieson, retain an 8.49 per cent shareholding in Funtastic. If the NSR deal is transacted however, that shareholding could exceed 20 per cent, thus requiring the consent of shareholders.
Funtastic is yet to finalising its underwriting arrangement with Craig Mathieson for the rights issue that will fund the acquisition and presumably pay down debt. At December 31, Fantastic had total liabilities of $146.7 million against total assets of $258.5 million.
BDO Kendalls Corporate Finance is nevertheless preparing an independent experts report on the value of the NSR acquisition and Funtastic's long term advisors Ernst & Young Corporate Finance are believed to be on the brief. Earlier this week however Funtastic appointed yet another accounting firm's corporate finance division to advise on the sale of its soft goods business. KPMG was given the brief to advise what Funtastic should do with all those Spiderman bed-sheets, Bratz pajamas, Winnie the Pooh slippers and Thomas the Tank Engine schoolbags.
Funtastic is working out the details to acquire Hong Kong-based toy maker NSR (HK) from Nir Pizmony, the founder of JNH toys and a former director of Funtastic. The proposed acquisition is an interesting one considering the changes in the Chinese toy industry over the past two years after export recalls in 2007 and the global financial crisis.
The mooted acquisition also comes after Pizmony and Craig Mathieson (son of pub baron Bruce) joined private equity firm Archer Capital in an attempt last year to buy out Funtastic for $133 million.
Archer Capital, which has previously led successful buyouts for MYOB, Cellarmasters and Ascendia Retail – the owner of Rebel Sport and Amart All Sports – broke off discussions with Funtastic in August last year after the parties failed to agree on a purchase price, but remained a significant shareholder.
Later on, in December, Lachlan Murdoch appeared on the share register with his private investment vehicle Antium buying a 14 per cent stake. Murdoch, who launched a failed bid last year for Consolidated Media Holdings, said at the time that there were no plans to launch a bid for Funtastic. Murdoch's other private investment company Illyria has a stake in the Indian Premier League.
Murdoch, a keen classicist with a philosophy degree from Princeton, named Antium and Illyria after an Ancient Roman city and province respectively.
In the more prosaic world of children's toys meanwhile, it is Funtastic doing the buying. NSR manufactures toys and among its portfolio of licensed and non-licensed products has the global master toy licence for Noddy, the Enid Blyton character. NSR has projected sales revenues of $15 million for the 2009 calendar year, Funtastic said.
In February Funtastic outlined a proposed scrip-based acquisition plan for NSR, whereby a minimum of 10 million shares would be issued to the vendor at 13.5 cents each and NSR's bank and shareholder debts worth $5.65 million would be assumed.
It was proposed that Pizmony would rejoin the Funtastic board at the completion of the sale. Pizmony, along with Craig Mathieson, retain an 8.49 per cent shareholding in Funtastic. If the NSR deal is transacted however, that shareholding could exceed 20 per cent, thus requiring the consent of shareholders.
Funtastic is yet to finalising its underwriting arrangement with Craig Mathieson for the rights issue that will fund the acquisition and presumably pay down debt. At December 31, Fantastic had total liabilities of $146.7 million against total assets of $258.5 million.
BDO Kendalls Corporate Finance is nevertheless preparing an independent experts report on the value of the NSR acquisition and Funtastic's long term advisors Ernst & Young Corporate Finance are believed to be on the brief. Earlier this week however Funtastic appointed yet another accounting firm's corporate finance division to advise on the sale of its soft goods business. KPMG was given the brief to advise what Funtastic should do with all those Spiderman bed-sheets, Bratz pajamas, Winnie the Pooh slippers and Thomas the Tank Engine schoolbags.
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