Reverse Corporation ‘was’ a niche telecommunications service provider operating in the reverse charge calling market. These services are now deemed unviable and as such the business necessitated its immediate shutdown. All employees of the company have been terminated on 1 July 2019. Remaining assets have been sold where possible and a special dividend was paid. From 1 July 2019 the company will have no operating business and will continue to explore options to maximise shareholder value by selling the listed shell.
The shell currently holds $75k in cash, $140k in receivables relating to the sale of the online contact lenses business sale due 1 July 2020, and a whopping $3.24m in franking credits available to be utilised. The aggregate value of the shell being $3.455m. Compare this to a market cap of $370k and you can see the potential upside the company holds.
The process to realise the value of these shares involves a ‘backdoor listing’. This involves the listed company taking in the business operations of a prospective unlisted company interested in the shell. It is an alternative to an IPO.
It is reassuring to see that the CEO of REF still holds 20% of the company, incentivising him to get the maximum value of his shares through a backdoor listing sale. Another 20% of the company is owned by ‘Sandon Capital Activist Fund’. This fund pursues a strategy of active engagement with management of which entities in which the fund invests and other stakeholders with the aim of unlocking realised value.