Audioboom – a closely held company up for sale

Audioboom logo

It is more than five months since London-listed podcast company Audioboom put itself up for sale, hiring Raine Advisors to help in “examining strategic options”, as noted in a 10 February RNS. Since the company is now in an offer period there are various morsels of information that are thrown our way, notably about the company’s shareholders.

I’ve held Audioboom for some time, since the early days when it was known as Audioboo, and have also been an on and off user of the company’s services. I originally bought shares in August 2014, but suffered as the share price crashed. I managed to average down and reduced my position, securing a small profit. I then bought back in January this year. I am cautiously optimistic about the company’s prospects, despite several problems along the way. I see podcasts as a growing medium that is starting to realise its promise.

Audioboom’s share price since August 2014. Image: London Stock Exchange

I’m not going to revisit Audioboom’s past mistakes in this post, although they are considerable, for example the failed acquisition of Triton Digital for $185m. This failure resulted in the payment of break fee of £700,000 to Triton, made up of £90,000 in cash and 16.6m shares. Ironically, Audioboom last month joined Triton to be part of the Canadian company’s podcast measurement system. I’m also not keen on the $4m loan facility provided by the directors, earning them an interest rate of 8%.

Anyway, let bygones be bygones (at least for the purposes of this post). I wanted to explore the scraps of food dropped off the table by Audioboom’s offer period. In particular, these come in the form of various obligations under the UK Takeover Code, with people holding more than 1% in the company having to make a public notification. Let’s first look at the major shareholders, as per the Audioboom Plc website updated on 21 February 2020.

Nick Candy26.79%
Herald Investment Management Limited6.58%
Kingsley Duffy/Slovar Limited3.46%

Nick Candy owns 26.29% of his shares through Candy Ventures, of which Nick Candy is a 90% shareholder.

Herald Investment Management initially took 60m shares, giving them a 6.69% slice of the pie, according to a RNS issued on 11 April 2017. Herald had valued their holding at £1.65m in their list of investments published in their December 2017 annual report.

Kingsley Duffy, a founder of HostelBookers.com, was involved with Audioboom before the reverse takeover by One Delta Plc. Duffy and UBC together owned 78.86% of then-Audioboo, with Duffy’s stake dropping down to 9.4% via his Slovar Limited vehicle following the acquisition.

Form 8 gives us information about the so-called Concert Party, which includes the directors, subsidiaries, as well as warrants and options issued.

Concert Party

HolderNumber of ordinary shares held% of voting share capital
Total Concert Party576,6744.12%
20 February 2020

Holdings for directors of Audioboom

NameNumber of ordinary shares held% of voting share capital
Michael Tobin185,4761.32%
Stuart Last4,1720.03%
Brad Clarke
Roger Maddock368,4612.63%
Steven Smith4,7640.03%
20 February 2020

Notably, Michael Tobin has warrants over 334,375 shares, representing 2.37% of the company.

Moving on now to the >1% holders, and here it’s the Form 8.3 that interests us.

Basil Sellers

(a) Full name of discloser:BAS Nominee Australia Pty. Limited as Trustee of the Sellers Family Trust
(b) Owner or controller of interests and short positions disclosed, if different from 1(a):   The naming of nominee or vehicle companies is insufficient.  For a trust, the trustee(s), settlor and beneficiaries must be named.Settlor: Mr. Peter Irving Burrows   Directors (Trustee): Mr. Basil Sellers Mr. Peter Burrows   Principal Beneficiaries: Mr. Basil Sellers Mrs. Gillian Clare Sellers
(1) Relevant securities owned and/or controlled:213,000
1.52%
21 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
OrdinarySale  5,000£2.55
21 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
OrdinarySale  2,000£2.77
19 February 2020

Basil Sellers appears to the Australian businessman who’s holding in Audioboom was previously noted as being held by Ganesh Holdings International Limited, according to a RNS filed by Gfinity Plc, which reveals the beneficial ownership. Dragon Holdings International Limited seems to be a connected company, said to be a member of the same corporate group.

Ganesh Holdings International has previously been involved with Mithril Capital Plc, which was renamed Be Heard Group Plc. Other shareholders of Mithril Capital included Rodger Sargent, a previous director of Audioboom and >1% holder, Robert Proctor, Audioboom’s previous CEO, and Candy Ventures, Audioboom’s biggest shareholder. Ganesh Holdings International was also a shareholder in Cleeve Capital Plc, which boasted other Audioboom holders, including Candy Ventures, Rodger Sargent, Courtney Investments and Robert Proctor. Cleeve Capital delisted from the Official List of the London Stock Exchange, acquired Satellite Solutions Worldwide Limited and then got admitted to AIM. Satellite Solutions Worldwide changed its name to Bigblu Broadband Group Plc. Audioboom non-executive chairman Michael Tobin is also non-executive chairman of Bigblu.

Jeremy Fenn

(a) Full name of discloser:JEREMY FENN
(1) Relevant securities owned and/or controlled:
256,832
1.83%
21 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
Ordinary sharesale  10,000£2.42
21 February 2020

Jeremy Fenn is the chairman and co-founder of Ignition Group Plc and former CEO of Sports Internet Group Plc, that got sold to Sky. Coincidentally, Rodger Sargent, a former Audioboom director and >1% holder, previously worked at Sports Internet Group as finance director. Fenn and Sargent were also both involved in Mobile Tornado Group Plc and Peerless Technology Group Plc.

David Evans

(a) Full name of discloser:David Evans
(1) Relevant securities owned and/or controlled:
361,050
2.58%
26 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
Ordinary sharePurchase  21,700£2.30
26 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
Ordinary sharePurchase  48,000£2.70
17 February 2020

David Evans is a director and majority shareholder in Belle Pubs and Restaurants, a chain of four venues across London. He also co-owned the British-trained Knocknanuss racehorse with Rodger Sargent, according to Racing Post. Evans is a significant shareholder at OTAQ, a company which was bought by Hertsford Capital Plc, of which Rodger Sargent was a director.

Rodger Sargent

(a) Full name of discloser:Rodger Sargent
(1) Relevant securities owned and/or controlled:
253,945
1.81%
17 February 2020
Class of relevant securityPurchase/sale  Number of securitiesPrice per unit
Ordinary shareSale  48,000£2.70
17 February 2020

Rodger Sargent has been mentioned several times elsewhere. As well as being a former director of Audioboom, he was also involved in Audioboom’s acquisition of Sonr News Ltd, a company purportedly involved in neuro-linguistic programming and artificial intelligence. Sonr was bought in January 2017 for £1.42m satisfied through the issue of shares. It applied to be struck off the company register in June 2020, according to Companies House, and Audioboom had already announced in May 2019 that the majority of Sonr staff had left the company. Sonr’s shareholders included Robert Proctor, former Audioboom CEO, majority Audioboom shareholder Candy Ventures, >1% Audioboom holder Courtney Investments, and Rodger Sargent.

Mark Horrocks

(a) Full name of discloser:Mark Ian Horrocks
(b) Owner or controller of interests and short positions disclosed, if different from 1(a):      The naming of nominee or vehicle companies is insufficient.  For a trust, the trustee(s), settlor and beneficiaries must be named.Mrs D J Horrocks Mr M I Horrocks Dewscope Limited Immedia Group PLC
(1) Relevant securities owned and/or controlled:
318,740
2.275%
20 February 2020

Mark Horrocks is a founding partner of Intrinsic Capital, and director of Immedia Plc, which has an investment in Audioboom. Immedia made a £90,000 investment in 6m Audioboom shares in March 2014, and holds 0.5% of Audioboom’s shares in issue, according to Immedia’s half-year results in September 2019. Horrocks was a shareholder in Cholet Investments Plc, that was renamed One Delta Plc and then became Audioboom. Horrocks has been involved in several businesses with Rodger Sargent including Senior Finance Plc and TMT Group Plc.

John Athwal

(a) Full name of discloser:Jito Athwal
(1) Relevant securities owned and/or controlled:
164,000
1.17%
5 March 2020

John Athwal, or Jito, as he is also known, is the businessman behind Premier Decorations, a company based in Middlesex selling seasonal decorations. He’s friends with Audioboom chairman Michael Tobin and the two have taken part in charity events together. They spent a night sleeping rough, according to City AM, and Athwal is acknowledged in Tobin’s book entitled “Live, Love, Work, Prosper: A fresh approach to integrating life and work”.

Triton

(a) Full name of discloser:Triton Holdings (Cayman), LP
(1) Relevant securities owned and/or controlled:
163,000
1.16%
20 February 2020

Triton received 16.6m shares as part of the failed acquisition by Audioboom, which would have been reduced to 166,000 shares as part of the 100:1 share consolidation approved at the June 2019 AGM. It seems Triton currently have 163,000 shares.

Warren Todd

(a) Full name of discloser:COURTNEY INVESTMENTS LTD
(b) Owner or controller of interests and short positions disclosed, if different from 1(a):      The naming of nominee or vehicle companies is insufficient.  For a trust, the trustee(s), settlor and beneficiaries must be named.SUSAN AND WARREN TODD THE BENEFICIAL OWNERS OF COURTNEY INVESTMENTS LTD
(1) Relevant securities owned and/or controlled:
352,146
2.51%
19 February 2020

Courtney Investments, a vehicle majority owned by Warren Todd, who’s in the property business, is, as previously mentioned, involved with a number of businesses that other Audioboom holders and directors are involved with. Furthermore, Courtney Investments is a significant shareholder in Baskerville Capital Plc, much like Rodger Sargent, according to the company’s June 2019 report. Todd and Sargent were also involved together in Senior Finance Plc in 2006.

Jane Hamon

(a) Full name of discloser:Jane Alison Hamon
(1) Relevant securities owned and/or controlled:
140,251
1.001%
18 February 2020

Jane Hamon appears to work for 722 Consulting as a consultant on logistics and supply chain. She seems to hold American and British nationality, be based in London and studied Industrial Engineering at Lehigh University, in Bethlehem, Pennsylvania, US. I can’t find any immediate connection between her and other Audioboom directors or holders.

Edge Performance

(a) Full name of discloser:Edge Performance VCT plc
(1) Relevant securities owned and/or controlled:
283,333
2.02%
12 February 2020

Edge Performance, a venture capital trust based in London, originally took a £500,000 stake in Audioboom, buying shares in April 2017. Edge Performance’s 6 month report ending 31 August 2018 revealed that the VCT made a follow on investment of £250,000. This gives Edge Performance a break even price of £2.65/share.

Annual Return

I thought it might be interesting to compare the revealed >1% shareholders to those listed on the annual return. The company is incorporated in Jersey, so files its annual return with the Jersey Financial Services Commission. The database has an effective date of 1 January, so not long before the formal sales process was announced. Here are the >1% shareholders, according to the annual return:

Candy Ventures SARL12.11%
JIM Nominees Limited Jarvis Acct8.34%
BNY (OCS) Nominees Limited HIT Acct7.90%
Candy Ventures SARL7.80%
Vidacos Nominees Limited BBUCCC Acct3.45%
Barclays Direct Investing Nominees Limited Client1 Acct3.32%
Barnard Nominees Ltd Obnomex Acct2.92%
CGWL Nominees Limited GC1 Acct2.73%
Barnard Nominees Ltd SAR07R Acct2.22%
HSDL Nominees Limited2.20%
Edge Performance VCT Plc 2.02%
Hargreaves Lansdown Nominees Limited 15942 Acct2.01%
The Bank of New York Nominees Limited 672938 Acct1.68%
UBS Private Banking Nominees Ltd Mainpool Acct1.61%
HSBC Global Custody Nominee UK Limited 329888 Acct1.59%
Seguro Nominees Limited ICCORE Acct1.47%
James Capel Nominees Limited PC Acct1.47%
Hargreaves Lansdown Nominees Limited HLNOM Acct1.41%
SBS Nominees Limited SBCLT Acct1.36%
Share Nominees Ltd1.30%
Interactive Investor Services Nominees Limited SMKTNOMS Acct1.25%
Vidacos Nominees Limited FGN Acct1.17%
Hargreaves Lansdown Nominees Limited VRA Acct1.12%
Lynchwood Nominees Limited 2006420 Acct1.06%
20 January 2020

This immediately throws up the problem of nominees accounts, another company safeguarding the shares on behalf of the beneficial owner. It feels like a bottomless pit trying to search for these various nominee accounts, although they do sometimes seem to have quite unique combinations of numbers or letters used as references. They may show up elsewhere, but there’s no guarantee they aren’t just pooled accounts set up by stockbrokers that may have been used for several individuals.

Part of Audioboom’s annual return

Nevertheless, some of the holders do appear in their own name, for example, Candy Ventures, which is strangely noted twice. Edge Performance VCT appears on the annual return, and its shareholding seems to tally with its ownership of stock as disclosed through the stock exchange. Given the size of their holding and the acronym, I’m guessing that the 7.90% holding by BNY (OCS) Nominees Limited HIT Acct is Herald Investment Trust (HIT).

The others, however, don’t seem to tally at all, slightly odd given that we’re talking about more than 20 shareholders who each hold more than 1% of the company. The first statement about a possible sale of Audioboom was published on 10 February and the annual return dates from 1 January, so we’re talking about just over five weeks. Could all of those various shareholders chopped and changed their positions in five weeks? But as noted, it’s hard to more definitive when dealing with nominee accounts.

Alongside all the nominee accounts, obscuring the real shareholders, there are a few that stick out as I delve further beyond those with >1%. David Evans, who according to recent filings on the stock exchange has 2.58% of Audioboom, only had 0.23% in the annual return. So it appears he bought 327,717 shares in the aforementioned five week period. The share price actually dipped around this time, hitting £1.925 on 29 January. Nevertheless, that equates to more than £630,000 just before the company announces that it is putting itself up for sale.

David Evans and Rodger Sargent also seem to have a sale and purchase of shares that occurs for exactly the same amount and price. Evans bought 48,000 shares at £2.70, the same day Sargent sold 48,000 shares at £2.70.

Conclusion

What does all of this say about the sale of Audioboom? It certainly seems that Audioboom is controlled by a number of people who know each other and who have done business together before, especially Rodger Sargent, who seems to know almost everyone involved. More than 58% of Audioboom shares are controlled by those mentioned above.

So is it likely that the directors and management would engage with a sale that wasn’t going to benefit all of them? It seems unlikely, especially when Nick Candy, the majority shareholder, has supported the company over several years, and Michael Tobin, the chairman, has warrants worth more than 2.3% of the company. But could something else be afoot? Such as a reverse takeover, like with Triton Digital, or a purchase that seemingly amounted to nothing, like SONR News.

It seems hard to rule out the chance that something other than a straight sale will happen, even though you would expect the company to look quite attractive to prospective buyers and relatively cheap at a market cap of £31m. I currently have a position at an average price of £2.18 per share, but can’t decide whether to top up more. I guess it would be best to decide before half year results announced on 21 July.

Disclaimer

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