SMI Vantage wants to delist without exit offer, citing ‘difficult financial conditions’

SMI Vantage plans to hold an extraordinary general meeting for minority shareholders to evaluate and vote on a resolution that will delist the company without an exit offer.

The investment and management company, which offers cryptocurrency mining-as-a-service solutions to retail clients, was ordered to delist after the Singapore Exchange (SGX) on August 1 rejected its request for an extension of the deadline for leaving the watchlist.

Following the bar’s suspension of trading on September 2, SMI Vantage was informed by the two controlling shareholders that they would not be making an exit offer for the company.

Both have also committed not to call back their shareholder loans worth approximately $10.6 million by the end of June 2024.

One of the two controlling shareholders, Mark Bedingham, has nevertheless agreed to continue to provide financial support to the company in its efforts to reach an agreement with its main creditors.

Bedingham is president and CEO of SMI Vantage.

On Friday (Nov 1), the company said it will not use the available cash to make an exit offer to its shareholders as that is now being used by the group to cover its monthly operating costs.

One of the “difficult financial conditions” mentioned was that the net short-term debt position at the end of June 2024 was approximately $937,000. About $34,000 of the $105,000 in corporate-level cash was held in Myanmar.

At the end of June, fixed assets stood at US$2.6 million, while trade receivables stood at US$18 million. The company said the “gradual realization” of these trade receivables would be the “most reasonable route” to preserve the value of these fixed assets.

Cost-saving measures

SMI Vantage noted that while previous financing plans would have helped alleviate the net short-term debt position, these were no longer available as such plans were dependent on the company remaining listed on the stock exchange.

The group will also cancel its expansion initiatives, such as the proposed acquisitions of new digital mining assets and a controlling stake in Whiskey Cask Club.

“The company is planning and has already started implementing restructuring measures to streamline operations and reduce costs across its various business units and within the company itself,” SMI Vantage said.

It estimates that this will reduce central overhead costs from $2 million per year to $400,000 per year – and emphasizes that some of its existing business operations are “not directly affected” by the delisting notice.

An example of this is the group’s consumer activities in Myanmar.

However, SMI Vantage noted that travel retail sales at Yangon International remained 60 to 70 percent below pre-Covid levels, which it attributed to reduced business travel and lack of tourism amid Myanmar’s political uncertainty.

The cryptocurrency business is operating at a “virtual breakeven cash flow position as Bitcoin is currently trading below industry expectations.”

The group said it is closely monitoring the operating conditions of its robochef business and “stands ready” to exit this venture, if necessary, to “ease financial pressure on the company.”

In March 2024, SMI Vantage completed the acquisition of a 51 percent stake in Provino Logistics, a Singapore-based importer of wine, beer and spirits.

The group said it recently began discussions with Provino’s former major shareholder – who remains a major shareholder and operating manager of the company – to reverse the takeover.

“Previous plans to help Provino expand are also no longer feasible due to the current shortage of new financing,” the group added.

In ‘best interests’

Given Bedingham’s financial support and the company’s “prudent business operations,” SMI Vantage expects to continue its traditional operations.

However, the company insisted it was “not possible or practical to monetize the company’s key assets in a significant way for an exit offering”. The group also underlined that it is highly unlikely that significant amounts of money will be transferred from Myanmar given the country’s current political climate.

SMI Vantage’s board of directors therefore concluded that delisting without an exit offer would be in the best interests of the company and its minority shareholders, compared to other exit options.

Doing so would also allow the company to share its thought process on this issue in a transparent manner and allow minority shareholders to make inquiries and have their voices heard, the company said.

SMI Vantage’s two controlling shareholders, including Bedingham, will not vote on the decision to delist without an exit offer at the upcoming EGM.