AFR article - see at the end about other acquisitions at 20 times earnings. Do they mean 20 times $2m profit?
"Chapman fields calls for in-play Queensland electricity provider LPEIt’s all hands on deck for bombed out ASX-listed electricity provider Locality Planning Energy.
The Sunshine Coast-based business copped an unsolicited takeover bid from private equity group River Capital in April just one day after it ousted chief executive, Damien Glanville, for selling shares to the suitor without the board’s permission.
Now, Street Talk can reveal LPE has tapped Chapman Capital Partners and King & Wood Mallesons to mount a defence. Sources said the pair are busy fielding calls from a range of interested parties in the $15.3 million market cap company.
LPE provides electricity metering, hot water, solar, batteries and EV charging networks to strata-title residences with 32,000 customers on its books. Its stock is in the doldrums, the result of a failed attempt to diversify into electricity retailing/trading and cryptocurrency mining. This saw the company incur significant losses and a more than 90 per cent decline in its share price.
The newly appointed board, which owns close to 25 per cent of the stock, has been focused on getting the company back on its feet. Its FY24 profit is expected to grow to $2 million off a $12 million loss last year.
River Capital’s takeover bid landed at 8¢ per share, or a 48 per cent premium to the last closing price, valuing the group at around $14.4 million. The firm currently holds just shy of 20 per cent of the stock, acquiring the shares from Glanville. Glanville is supportive of the bid, not pulling any punches when he told The Australian Financial Review that the level of professionalism in the business has “slipped”. LPE’s board, led by chairman David Jarjoura, has advised shareholders to take no action.
Should it gather more interest, advisers will be hoping to push that figure up. The market certainly thinks there’s more to come, with the shares trading at 11¢ a pop.
To get people excited, Chapman is likely to point to competitors Living Utilities and Active Utilities which were acquired by infrastructure funds for over 20-times earnings in recent years. Applying a more conservative 8-time multiple to LPE’s expected earnings, and including the value of tax losses and a loan to the Bundaberg BioHub, suggests the company’s shares could be worth 20¢ per share.
River Capital is advised by law firm Gilbert & Tobin.
