Stack BTC (AQSE:STAK) announced it has revised the terms of its proposed acquisition of Direct Bullion, stripping out the £3 million cash payment and all cash earn-outs so the entire £12 million consideration will now be paid in new shares.
The London-listed company, which is building a portfolio of cash-generative businesses alongside a Bitcoin treasury, first set out terms for the deal in an announcement on 15 September.
Under the revised deal with Eleven Intl, the vendor of DB London, which trades as Direct Bullion, £7.6 million will be paid in shares on completion, up from roughly £4 million under the original cash-and-shares structure.
A further £4.4 million in deferred consideration may follow over years two to five, contingent on Direct Bullion achieving EBITDA of at least £2.5 million in each relevant year, with the earn-out now weighted more heavily towards years three to five than under the original terms.
The consideration shares will be issued at a minimum of 6p each, the company's mid-market price on 14 September, and will carry a four-year lock-in.
At that floor price, Stack BTC would issue up to 200 million new shares in total: 126.67 million on completion and up to 73.33 million in deferred consideration shares.
Direct Bullion, a UK-based precious metals dealer, reported audited revenues of £52.1 million and profit after tax of £2.15 million for the year ended 31 January.
The Independent Directors, David Galan and Melisa Lawton, stated that the all-share structure "preserves the company's cash resources for its Bitcoin treasury strategy and future growth initiatives" while better aligning the vendor's interests with those of shareholders.
With no cash required to fund the deal, Stack BTC said its existing cash resources will now be retained in full to support its acquisition strategy, Bitcoin treasury strategy and general working capital needs.
The revised terms introduce a new repurchase right allowing the vendor to buy back Direct Bullion in limited default scenarios, including insolvency events at Stack BTC or the cessation of its shares trading on Aquis or another recognised exchange, exercisable from completion until the end of year five.
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The deal remains a related party transaction under the Aquis Rules, since Paul Withers, a director and substantial shareholder of Stack BTC, is also sole director of Direct Bullion and sole director and shareholder of the vendor; Withers continues to abstain from board discussions on the transaction.
The transaction still constitutes a reverse takeover and will require a waiver under Rule 9 of the Takeover Code, with the larger share issuance under the revised terms increasing the maximum potential stake of the concert party; that waiver will need approval from independent shareholders on a poll, with the concert party abstaining.
Completion remains conditional on publication of an MTF Admission Prospectus, due diligence, definitive transaction documentation, AQSE approval, shareholder approval at a general meeting, and Stack BTC's re-admission to trading on the Access Segment of the AQSE Growth Market following the automatic cancellation of its current admission.
The board and senior management will remain unchanged following completion, the company said.
