1 00:00:00,120 --> 00:00:02,480 Speaker 1: So we've got potentially more trouble for the cash strap 2 00:00:02,560 --> 00:00:06,320 Speaker 1: honey company Comveta. Conveta shareholders have voted today against the 3 00:00:06,360 --> 00:00:10,000 Speaker 1: takeover offer from Florence. The deal to buy Conveta for 4 00:00:10,039 --> 00:00:13,440 Speaker 1: eighty cents a share needed three quarters support from shareholders 5 00:00:13,440 --> 00:00:15,840 Speaker 1: to go through. We don't have the official vote count yet, 6 00:00:15,840 --> 00:00:17,959 Speaker 1: but we know it was short of that margin. Paul 7 00:00:18,000 --> 00:00:20,800 Speaker 1: Robertshaw is the chief investment officer at Octagon Asset Management 8 00:00:20,840 --> 00:00:21,200 Speaker 1: and with us. 9 00:00:21,200 --> 00:00:23,480 Speaker 2: Now, Hey, Paul, Oh, how are you doing? 10 00:00:23,560 --> 00:00:25,079 Speaker 1: I'm very well, thank you. What happens now? 11 00:00:26,640 --> 00:00:28,160 Speaker 2: Oh? I think in the board pointed out and its 12 00:00:28,200 --> 00:00:30,120 Speaker 2: presentation today, they've got to go back to the balance 13 00:00:30,160 --> 00:00:32,320 Speaker 2: sheet and look at the various ways that they can 14 00:00:32,360 --> 00:00:35,120 Speaker 2: remedy that because just waiting for operating improvement is probably 15 00:00:35,120 --> 00:00:36,400 Speaker 2: not going to be quick enough for the bankers, I 16 00:00:36,400 --> 00:00:37,080 Speaker 2: don't think, yeah. 17 00:00:36,920 --> 00:00:38,680 Speaker 1: Because they've got a cash flow problem, right, So do 18 00:00:38,720 --> 00:00:39,839 Speaker 1: they have to sell some stuff? 19 00:00:40,960 --> 00:00:43,680 Speaker 2: Yeah? I mean they've done a reasonable job liquidating inventry 20 00:00:43,680 --> 00:00:45,600 Speaker 2: and they've already sold some supers assts. I think they'll 21 00:00:45,600 --> 00:00:47,000 Speaker 2: try to do a bit more of that, but it's 22 00:00:47,000 --> 00:00:49,559 Speaker 2: not an easy environment for those things. So you know, 23 00:00:49,640 --> 00:00:54,080 Speaker 2: as they warned everywhere and the management team, the board, 24 00:00:54,120 --> 00:00:57,360 Speaker 2: and the independent report the capital raiser is probably quite likely. 25 00:00:58,720 --> 00:01:01,480 Speaker 1: Is it possible that the company he could actually fold? 26 00:01:03,160 --> 00:01:06,120 Speaker 2: Oh, anything's possible. I mean, if you can believe the 27 00:01:06,160 --> 00:01:08,640 Speaker 2: management strategy and the future ebit, which I think they 28 00:01:08,640 --> 00:01:12,320 Speaker 2: reconfirmed earlier this week thirteen and a half for the 29 00:01:12,360 --> 00:01:14,839 Speaker 2: next year of that keeps growing and returns to something 30 00:01:14,840 --> 00:01:16,960 Speaker 2: like twenty million over time. I think it's got a 31 00:01:17,000 --> 00:01:19,639 Speaker 2: sustainable business. But you've got to get through the balance 32 00:01:19,640 --> 00:01:20,199 Speaker 2: sheet first. 33 00:01:20,880 --> 00:01:23,720 Speaker 1: Is it possible that Florence could come back with a 34 00:01:23,800 --> 00:01:24,360 Speaker 1: raised offer? 35 00:01:27,040 --> 00:01:30,480 Speaker 2: Again, anything's possible. But they've been pretty firm around this offer. 36 00:01:30,520 --> 00:01:33,160 Speaker 2: They are offering serholders away not to dip into their 37 00:01:33,160 --> 00:01:35,720 Speaker 2: own pocket and let Florence deal with that. Yeah, So 38 00:01:35,920 --> 00:01:37,560 Speaker 2: they may decide there's not enough upside. I mean, what 39 00:01:37,640 --> 00:01:40,440 Speaker 2: was anything about ninety two cents. That's only fifteen twenty 40 00:01:40,440 --> 00:01:43,840 Speaker 2: percent upside from here from eighty cents, So maybe there's 41 00:01:43,840 --> 00:01:45,280 Speaker 2: not enough in it for them to raise the price. 42 00:01:45,720 --> 00:01:47,600 Speaker 1: There was some talk of one of the co founders 43 00:01:47,840 --> 00:01:50,880 Speaker 1: putting together an alternative plan. Any sign of that yet. 44 00:01:51,840 --> 00:01:53,840 Speaker 2: I would have loved to see it, Heather, because it 45 00:01:53,840 --> 00:01:55,920 Speaker 2: would have given me some reason to think that he 46 00:01:55,960 --> 00:01:57,480 Speaker 2: had a better strategy than the board to one, but 47 00:01:57,520 --> 00:02:00,920 Speaker 2: I've seen nothing, so we're stillating with baited breath on 48 00:02:00,960 --> 00:02:01,400 Speaker 2: that one. 49 00:02:02,000 --> 00:02:04,800 Speaker 1: Paul, do you think that the shareholders have made a 50 00:02:04,800 --> 00:02:05,400 Speaker 1: mistake here? 51 00:02:07,200 --> 00:02:09,400 Speaker 2: I'm not going to talk for other shareholders, but I 52 00:02:09,440 --> 00:02:11,240 Speaker 2: thought this was the best deal that was on the 53 00:02:11,280 --> 00:02:12,800 Speaker 2: table and likely to be on the table. If they 54 00:02:12,880 --> 00:02:15,800 Speaker 2: raise money, let's call it forty cents, when are UNI 55 00:02:15,800 --> 00:02:17,160 Speaker 2: it's going to see eighty cents on the shares you've 56 00:02:17,160 --> 00:02:19,360 Speaker 2: already got. I think a bird in the hand in 57 00:02:19,360 --> 00:02:21,760 Speaker 2: this case might well have been the right. Well, that 58 00:02:21,840 --> 00:02:23,760 Speaker 2: was our care and we were happy to support the bird. 59 00:02:24,400 --> 00:02:27,320 Speaker 1: Now, how is it even that Convetter has ended up 60 00:02:27,320 --> 00:02:28,480 Speaker 1: in such a dire situation? 61 00:02:31,400 --> 00:02:33,760 Speaker 2: Yeah, I mean, I guess they had a CEO and 62 00:02:33,760 --> 00:02:35,799 Speaker 2: you've got it back the CEO. That's the way companies work, 63 00:02:35,840 --> 00:02:39,400 Speaker 2: and that strategy. But when it became clear that China 64 00:02:39,480 --> 00:02:42,720 Speaker 2: was slowing, that the market was a massive over supply 65 00:02:42,800 --> 00:02:46,800 Speaker 2: of honey hives doubled nearly tripled at the peak, you 66 00:02:46,840 --> 00:02:48,560 Speaker 2: needed to change the strategy, and they've just been far 67 00:02:48,600 --> 00:02:51,200 Speaker 2: too slow. They tried to hold pricing hold in the trees. 68 00:02:51,560 --> 00:02:54,600 Speaker 2: They probably needed to act far more aggressively in the 69 00:02:54,600 --> 00:02:58,959 Speaker 2: marketplace and around their own honey procurement two years ago, 70 00:02:58,960 --> 00:03:01,040 Speaker 2: two and a half years ago. So it's it's been 71 00:03:01,080 --> 00:03:02,840 Speaker 2: in the works for a while and the market hasn't 72 00:03:03,200 --> 00:03:05,240 Speaker 2: hasn't got better or good enough to bail them out. 73 00:03:05,320 --> 00:03:06,840 Speaker 1: Yeah, you sound exasperated, are you. 74 00:03:08,360 --> 00:03:10,840 Speaker 2: It hasn't been a good investment for us, Heather. We've 75 00:03:10,840 --> 00:03:12,600 Speaker 2: been there for a while and it's it's a tear 76 00:03:12,600 --> 00:03:14,799 Speaker 2: added a lot, and we think putting more money in 77 00:03:15,560 --> 00:03:18,160 Speaker 2: without some well, you know, there is a strategy there, 78 00:03:18,200 --> 00:03:20,720 Speaker 2: but we're short on execution. It's a brand new management team. 79 00:03:21,160 --> 00:03:23,200 Speaker 2: They've got to deliver things. The market still hasn't fully 80 00:03:23,240 --> 00:03:25,840 Speaker 2: rebalanced in terms of inventory. You know, we're taking more 81 00:03:25,919 --> 00:03:28,280 Speaker 2: risk by not accepting the offer in eighty cents. 82 00:03:28,440 --> 00:03:30,280 Speaker 1: Yeah, hey, thank you very much. I really appreciate you 83 00:03:30,280 --> 00:03:32,640 Speaker 1: talking us through that. Paul Paul Roberts, LL, Chief investment 84 00:03:32,680 --> 00:03:34,600 Speaker 1: Officer at Octagon Asset Management. 85 00:03:35,280 --> 00:03:38,440 Speaker 2: For more from Heather Duplessy Alan Drive, listen live to 86 00:03:38,560 --> 00:03:41,560 Speaker 2: news Talks sa'd B from four pm weekdays, or follow 87 00:03:41,600 --> 00:03:43,320 Speaker 2: the podcast on iHeartRadio.