Tuesday, July 15, 2014

Paragon Group becomes largest shareholder in Service Point Solutions, SA

I just finished reading some reports that were very recently filed by Service Point Solutions, SA with the CNMV (Spain’s equivalent of the U.S. SEC.)  The reports are all in Spanish, and I used Google-Translate in an attempt to figure out what they said.  Not easy to do, because Google-Translate translations are not perfect!

What we already know to have happened in the SPS matter (I guess I should say, “debacle”, rather than say “matter”, for what’s happened to SPS has, most certainly, been a mess), which, for all intents and purposes, began in October 2013:

In late October 2013, SPS’ lenders took control of the holding company that owned SPS’ business units in the UK (SP UK), in Norway (Allkopi) and in Sweden (Holmbergs.)

In November, SP US – was shut down.  I still don’t know “who” gave the order to shut down SP US.   SP US’s assets were later sold to The Color Company.

In February, 2014, SPS took itself and its remaining business units into bankruptcy reorganization.

After that, Mimeo.com purchased SPS’ German business unit (Koebcke).

And, in May, The Paragon Group purchased (from SPS’ lending group) SP UK, Allkopi (Norway) and Holmbergs (Sweden).

After reading the most recent documents filed by SPS with the CNMV, these, apparently, are the “latest developments” in the Service Point Solutions, SA matter:

Paragon Group has become SPS, SA’s largest shareholder (with some 12.4% of SPS, SA’s outstanding shares); this, apparently, was accomplished by Paragon Group purchasing $10 mil of SPS SA’s convertible debt (bonds) and then converting that debt to SPS, SA shares.  In essence, this transaction puts Paragon Group in control of “the rest” of SPS, SA’s business units (the units that were not previously acquired by The Color Company, Mimeo.com or by Paragon Group.)

It is planned that SPS, SA’s shares will resume trading sometime in September or October.  (Trading was halted in – I think it was – February.)

As to the creditors of SPS, SA, it looks like this is what’s going to happen.  (I would think that this is a proposal at this point, one that has to be approved by the BK court, before it becomes binding. But, it could well be that the BK court has already approved this plan.)

Liens – apparently, 20% of the debt will be extinguished, with the remaining 80% converted to ownership in SPS shares.

Ordinary loans - apparently, 60% of the debt will be extinguished, with the remaining 40% converted to ownership in SPS shares.

Subordinated loans - apparently, 60% of the debt will be extinguished, with the remaining 40% converted to ownership in SPS shares.

Please NOTE that, where I’ve said that debts will be “extinguished”, I might have misinterpreted what was said in the report.  It could be that the debts are NOT going to be extinguished and that creditors will be paid in cash (or notes.)  One thing is for certain, that being that creditors will end up owning a good portion of SPS SA’s shares.)

In one of the reports, this is said about the Paragon Group..
“In 2013, it had Sales of 161 Million Euros and EBITDA of 11 Million Euros.”

In 2014, Paragon will report sales a lot greater than that, due to its aggressive moves in 2014 to buy SP UK, SP Norway, SP Sweden and a good slug of SPS SA’s shares.

Early on in this debacle, where I was referring to statements in SPS reports that so much as said SPS SA was attempting to negotiate, to reorganize and to keep all of its business units together …..

Humpty Dumpty sat on a wall,

Humpty Dumpty had a great fall.

All the king's horses and all the king's men

Couldn't put Humpty together again.

Well, as it has played out, Paragon Group has picked up most of the pieces!  The only pieces that remain “not picked up” by Paragon Group include SP US and SP Germany.  So, will we later see The Color Company sell (what remains of) SP US to Paragon Group?  And, will we later see Mimeo.com sell SP Germany to Paragon Group?  If both of those happen, I’ll have to eat crow!

No comments:

Post a Comment