Audioboom’s failed sale and Singapore sling

Main photo: Singapore Sling at Raffles Long Bar, by VasenkaPhotography, licensed under Creative Commons Attribution 2.0 Generic (CC BY 2.0).

Podcast company Audioboom on Wednesday completed its new investment worth £3.15m, issuing 1.4m shares to investor Peter Antonioni through his Singapore-based company One Nine Two. Antonioni paid £2.25 a share for a 9.06% stake in Audioboom, which since the original announcement has dropped down to 8.93%, according to the notification of major holdings.

Audioboom had said last month it wasn’t going to be bought out by a possible suitor, despite a formal sales process dragging on since February. The company said it had engaged with “several interested parties”, but offers on the table weren’t at enough of a “premium” to the current share price and didn’t represent “appropriate value for shareholders”. Curiously, the company terminated the agreement with Raine Advisors without paying any transaction fees – Raine is known to charge retainer fees, announcement fees and success fees.

Since the failed buyout, Audioboom has received the new investment from Singapore, seen directors dealing of more than £135,000 and issued a large chunk of almost 218,000 shares to satisfy options granted to an ex-employee.

False hopes?

I previously mused about the closely-held nature of Audioboom’s shares, with a number of seemingly interconnected shareholders. I did ponder whether something other than a straight sale would happen, especially given the previous attempt at a reverse takeover of Triton Digital, and acquisition of Sonr News that amounted to nothing. Nevertheless, I held out some hope for a sale given the overall level of interest in the podcast industry, and wanted to see return for my modest holding at £2.18 per share.

The RNS about the sales process, published on 14 October, was preceded by a cheeky little leak to Sky News reporter Mark Kleinman who jumped the gun the day before, announcing that Audioboom had announced a fundraising “after deciding to call off a long-running auction”. Hard to speculate on who was involved in this “auction”, although Kleinman describes “a number of multinational media companies”, citing “insiders”, but careful to say that the podcast firm “could not be reached for comment”.

The way Sky News describes the fundraising of £3.15m appeared to somewhat plaster over the failure of the sales process, as Kleinman referred to board members believing the company is “undervalued by the public markets”. The Sky journalist also outlined how the proceeds of the fundraising from One Nine Two and Peter Antonioni will be invested in “developing original content”, a line of business Audioboom has pursued for quite some time.

“Seasoned international entrepreneur” Peter Antonioni, via AAA Capital

Directory enquiries

British citizen Antonioni is in fact not just the “controlling investor” in One Nine Two Pte Ltd, he’s the only investor, listed as the sole shareholder in the Singaporean company, according to the latest business profile filed with Singapore’s Accounting and Corporate Regulatory Authority. The company, formerly known as Mesh Ace Pte Ltd, was incorporated on 27 May 2019 and is registered at an address which appears to be a condo building in Singapore. One Nine Two is said to be interested in “high tech growth opportunities”, and not as you might think, directory enquiry services!

Audioboom didn’t say much about Antonioni in its RNS announcing the sale, instead focusing on how his company’s money will be used as “growth capital” to invest in original content. But a few Google searches about One Nine Two reveal that this isn’t Antonioni’s first foray into AIM-listed companies.

Director in several Singapore-based companies

One Nine Two is listed as a significant shareholder of All Active Asset Capital Limited, holding more than 15% of the company’s shares, while Antonioni was briefly a director, appointed on 9 July 2020, stepping down on 23 October 2020 to “pursue other interests”. In his biography as a non-executive director, Antonioni is said to have worked for 26 years at Tradition as a commodities broker for the energy derivatives team. The bio says that he’s also been a “co-founder and investor in sophisticated entertainment ventures” in several Asian countries.

Antonioni has a number of current and past directorships, according to a RNS:

Current directorships or partnerships

  • One Nine Two Pte Ltd
  • Le Noir Pte Ltd
  • Strategia Advisory Asia Pte Ltd
  • XRG Energy Pte Ltd
  • Leeward Holdings Pte Ltd

Past directorships or partnerships

  • MyKraft Holdings Pte Ltd
  • PMH Investments Pte Ltd
  • Sunrise Energy Pte Ltd
  • Attica Pte Ltd

It seems that Le Noir is a company running three bars, two in Singapore and one in Kuala Lumpur. Strategia Advisory Asia Pte Ltd is gazetted to be struck off the company register, according to details on the Accounting and Corporate Regulatory Authority.

XRG Energy appears to be a live company, according to the Singaporean authorities, but not much trace of it is apparent on the internet. Leeward Holdings is likewise a live company, but little sign of its activity appear on the internet.

Interconnected investors

MyKraft Holdings was struck off the company register in Singapore, but in addition to Antonioni it boasted Mike Power as a director, according to a regulatory filing in the UK for High Growth Capital Plc, announcing his appointment as non-executive director. Michael (Mike) Power’s LinkedIn profile says he worked at the Development Bank of Singapore and is now CFO at Aaqua, chairman at Mesh Holdings Plc (formerly known as High Growth Capital) and non-executive director at Sentiance. Funny coincidence that Power was director at the same Singapore company as Antonioni, who himself is director of a company previously called Mesh Ace, a similiar name to Mesh Holdings, of which Power is chairman.

It’s another coincidence that Chris Akers, a well-known AIM investor, is a shareholder of Meshing Holdings, retaining 3.1% of the company’s stock, as well as almost 10% of AAA Capital, a company Antonioni is involved with. All very cozy.

I can’t see many online footprints for PMH Investments or Sunrise Energy, but Attica appears to be a Singapore club that Antonioni was involved with. The Straits Times said in May 2016 how Antonioni and fellow British expat Mark Brimblecombe took over operations of the club, after being “sleeping partners” previously.

Furthermore, it must be noted that Audioboom players such as Rodger Sargent, a former director of the podcast company, are linked to Antonioni through AAA Capital. Sargent is an executive director of AAA Capital and holds 0.57% of the company’s share capital.

In an even more circuitous fashion, Antonioni took a 5.47% chunk of Asimilar Group Plc earlier this year, according to a regulatory filing. This shareholding was dropped down to less than 3% in late August, a filing in September said, although the company’s website lists him as holding 5.35%, as of 2 November 2020. Asimilar Group stands out since sitting on the board of directors is Mark Horrocks, who holds 2.275% of Audioboom’s shares, and also holding 6.63% of Asimilar Group’s share capital is the aforementioned Chris Akers.

The Antonioni effect

So what can we say about the share price of these other listed companies since Antonioni got involved? Antonioni’s company One Nine Two (sometimes referred to 192 Pte Ltd) was first linked to AAA Capital on 16 April 2020, according to a regulatory filing, taking a 14.5% slice of the share capital. The share price stood at 1.4p on the day his holding passed the threshold for notification of a major holding. It now stands at 7.15p (closing price on 10 September), more than five times higher since Antonioni got involved.

Chart for All Active Asset Capital, via London Stock Exchange

Asimilar Group, which Antonioni took a 5.47% stake in on 20 January 2020, hasn’t seen quite as dramatic a rise in share price. It has climbed from 48p, when his holding passed the threshold for notification, around 28p on 29 August, when his holding dropped below 3%. Trading in Asimilar Group was suspended during the summer months.

Chart for Asimilar Group, via London Stock Exchange

Audioboom’s share price has been a seesaw over the past year, crashing during the coronavirus sell-off in March, recovering to hit £2.30 a share in July, then slumping again, dropping to £1.54 in September. The news of the unsuccessful sales process, latest revenue figures and new placing appear to have given the share price somewhat of an initial boost, reaching £2.05 a share on 14 October 2020, but it has since traded downwards, going as low as £1.63.

The volume and value of of shares traded spiked in October, but didn’t quite match the highest volumes in February, when the sales process was announced. Remember, the price hit £2.75 a share before Audioboom’s management said they were pursuing a buyout.

Value traded on a monthly basis, via London Stock Exchange

Directors dealings and more dilution

Could Antonioni’s involvement in Audioboom result in the same takeoff for the share price as experienced by AAA Capital? Impossible to say, but it hasn’t happened yet. Two Audioboom directors have bought shares since the end of the sales process – Chairman Michael Tobin has bought four tranches worth almost £128,000 and Roger Maddock purchased about £8,500. This potential show of confidence in Audioboom has been somewhat tainted by yet more dilution to the share capital as on 21 October 2020 an ex-employee was issued 217,990 shares, worth more than £490,000 (if we use Antonioni’s purchase price of £2.25 a share). I would hazard a guess that these relate to ex-CEO Rob Proctor.

Audioboom’s biggest problem, and perhaps the reason why it didn’t clinch a deal to be bought out, is the lack of profit. Revenue figures are up in the Q3 trading update, reaching about $6.5m, but this company continues to lose money, making an adjusted EBITDA loss of $0.4m. This might be much less than the same period last year, and the revenue growth might be outpacing the “wider industry average”, as the RNS notes. But this isn’t a nascent company, and it would have made profit if only it could have got its expenditure under control. Total staff costs were more than $6.1m in the year to 31 December 2019, with 40 staff taking home an average salary of $153,550 and the directors making $718,000. Administrative expenses were stated as $12.3m and lease liabilities were $1.3m. For a small, nimble podcast company, this just seems a little extravagant.

Show me the money!

The other thing which is slightly off-putting is the special purpose vehicle created by the company’s Chairman Michael Tobin and largest shareholder, Candy Ventures, to lend money to Audioboom. The $4m loan facility announced in February 2020 attracts an interest rate of 8%, as well as several fees, and was said to be in response to an expectation that equity issues and subsequent dilution to shareholders had a negative impact on the share price. A separate $4m facility guaranteeing minimum podcast revenue to certain content partners was announced in June 2019 and gives SPV Investments Ltd an 8% share of the net advertising revenue (after paying the content partner), as well as warrants for shares.

The issue of shareholder dilution was once again mentioned in the half-yearly report in July 2020, but that’s exactly what just happened with Antonioni’s new shareholding in Audioboom, which is rather contradictory. The loan already cost the company $87,000 in the first six months of 2020 on $500,000 drawn down. It is not clear to me where the minimum revenue guarantees appear on the balance sheet in H1 2020. The Q3 trading update says $1m from the minimum revenue guarantees has been doled out and a total of $700,000 was taken from the loan facility. With £3.15m raised from One Nine Two you might expect that this reliance on the Candy/Tobin SPV would be reduced, however, things aren’t always very clear with Audioboom’s management.

I’m not really too sure what the conclusion to all this should be, because there are several things which concern me about Audioboom and the failure of the formal sales process. Antonioni’s new shareholding might be promising, yet he appears to fall into the same group of interconnected personalities who control Audioboom‘s share capital.

Could Antonioni’s arrival on the scene prompt the share price to rocket, like with AAA Capital? That could be a possibility, but with Asimilar Group his involvement didn’t quite result in the same share price increase.

No let-up in podcast M&A

Besides Antonioni and the failure of the sales process, what are we left with? Audioboom shows a lot of promise with its increasing slate of original podcasts, platform and advertising sales. Although it continues to lose money, despite increasing revenues, while at the same time the SPV pays a hefty premium to the chairman and biggest shareholder. I’m certain this company would be making a profit if it wasn’t for certain decisions, such as the attempt at a reverse takeover and acquisition of Sonr News, as well as poor cost control.

It seems slightly ironic to me that other podcast companies continue to be targets for acquisition, as Audioboom’s sales process fails. Voxnest, a company that Audioboom supposedly formed a partnership with, was bought out last month by iHeartMedia for approximately $50m, according to an earnings transcript published on Seeking Alpha. Audioboom had said back in February 2017 that it had formed a strategic partnership with iHeartMedia.

Spotify also announced on Tuesday that it splashed out $235m on Megaphone, a podcast company it purchased to help increase revenues from advertising. So the M&A deals are certainly still out there, as consolidation within the podcast industry continues, but it feels like Audioboom has lost its first mover advantage. I think I’m going to hold or even trim my holding in Audioboom, since I’m losing faith that it will ever live up to expectations, with continued share dilutions, never achieved promises of profitability and runaway costs.

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