Me Today – Shareholders’ meeting
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Appointment of Proxy
If you do not plan to attend the meeting, you may appoint a proxy. The
Chairman or any of the other Directors is prepared to act as a discretionary
proxy for any shareholder. If, in appointing a proxy, you have inadvertently not
named someone to be your proxy (either online or on the enclosed proxy form),
or your named proxy does not attend the meeting, the Chairman of the meeting
will be your proxy and will vote in accordance with your express direction. To do
this, enter the name of your proxy in the space allocated in ‘Step 1’of this form.
A proxy need not be a shareholder of the company.
Voting of your holding
To direct your proxy how to vote on each resolution, you should tick the
appropriate box on the proxy form. If you appoint a proxy, but do not tick one of
the boxes in relation to a resolution, you will be deemed to have granted
your proxy the discretion to cast your votes as he or she decides.
Attending the Meeting
Bring this form to assist registration. Companies or body corporates that wish
to attend through a representative must ensure that the representative brings
a copy of the notice appointing him or her to the meeting. Notices appointing
representatives must be provided to Computershare at least 48 hours before the
time of the meeting.
Voting Restriction
The trustees of the Jarvis Trust and Jarvis Trust’s Associated Person(s) (as
defined in the Listing Rules) are not permitted to vote on Resolution 1.
MTL Securities Limited (MTL) and its Associated Person(s) (as defined in the
Listing Rules) are not permitted to vote on Resolutions 2, 3, 4 and 5.
Directors and their Associated Persons (as defined in the Listing Rules) are not
permitted to vote on Resolution 4. Persons subject to a voting restriction may
not be appointed as a discretionary proxy (but can be appointed as a non-
discretionary proxy and expressly directed how to vote if appointed by a person
who is not disqualified from voting). All persons registered on the Company’s
register of shareholders as the holder of shares as at 5pm on 6 March 2024
shall, subject only to the preceding restrictions, be entitled to vote at the
in person or by proxy.
Signing Instructions for Postal Forms
Individual
Where the holding is in one name, the securityholder must sign.
Joint Holding
Where the holding is in more than one name, all of the securityholders
should sign.
Power of Attorney
If this Proxy Form has been signed under a power of attorney, a copy of the
power of attorney (unless already deposited with the Company) and a signed
certificate of non-revocation of the power of attorney must be produced to the
Company with this Proxy Form.
Companies
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For your proxy to be effective it must be received by 11.00 am on Wednesday, 6 March 2024.
Special Meeting of Me Today Limited to be
held to be held at Events on Khyber, Level 2,
155 Khyber Pass Road, Grafton,
Auckland 1023 on Friday, 8 March 2024
commencing at 11.00 am.
ATTENDANCE SLIP
Proxy/Voting Form
Appoint a Proxy to Vote on Your Behalf
STEP 1
hereby appointof
or failing him/herof
as my/our proxy to vote on my/our behalf in accordance with the instructions below and otherwise as he/she sees fit at the Special Meeting of Me Today Limited to
be held to be held at Events on Khyber, Level 2, 155 Khyber Pass Road, Grafton, Auckland 1023 on Friday, 8 March 2024 commencing at 11.00 am and at any
adjournment thereof and to vote on any resolution to amend any of the resolutions, on any resolution so amended and on any other resolution proposed at the meeting (or
any adjournment).
I/We being a securityholder/s of Me Today Limited
Items of Business - Voting Instructions/Ballot Paper
STEP 2
Please note: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf and your votes will not be counted in
computing the required majority. Please note that if the shares are held jointly, the appointment made is made on behalf of each joint holder
Signature of Securityholder(s) This section must be completed.
SIGN
or Sole Director/Director
Securityholder 1Securityholder 2Securityholder 3
Contact Name Contact Daytime Telephone Date
Special Resolutions
1.
To ratify, confirm and approve entry into a variation agreement recording the extension of the repayment
date of the debt owing to the trustees of the TW Jarvis (No. 1) Family Trust to 30 June 2026 for the
purposes of NZX Listing Rule 5.2, as described further in the explanatory notes to the notice of meeting.
2.
To ratify, confirm and approve the reclassification of 2,480,352 non-voting shares to voting shares for
the purposes of Rule 7(d) of the Takeovers Code, as described further in the explanatory notes to the
notice of meeting.
3.
For the purposes of Rule 7(c) of the Takeovers Code, to approve the transfer from MTL Securities Limited of:
a. 3,692,080 shares to the trustees of Baker Investment Trust No 2; and
b. 2,932,057 shares to the trustees of Sinclair Investment Trust; and
c. 222,000 shares to M & N Kerr Holdings Limited,
as further described in the explanatory notes to the notice of meeting.
4.
To approve the issue of up to 34,734,688 ordinary shares at an issue price of 8 cents per share to raise
up to $2,778,775 (the Rights Issue) for the purposes of NZX Listing Rule 4.2.1, as described further in the
explanatory notes to the notice of meeting.
5.
To approve the partial underwriting of the first $2,000,000, and potential subscriptions up to a further
$750,000, of the Rights Issue by the trustees of the Baker Investment Trust No 2 as to 25,781,250
ordinary shares and the trustees of the Sinclair Investment Trust as to 8,593,750 ordinary shares and
the potential subscriptions for up to $137,310, or up to 1,716,379 shares, by M&N Kerr Holdings Limited
for the purpose of Rule 7(d) of the Takeovers Code and NZX Listing Rule 5.2, as described further in the
explanatory notes to the notice of meeting.
For
Against
Abstain
Proxy
Discretion
or Director (if more than one)
---
Auckland Wellington Christchurch Wanaka
Level 15, Swanson House, Level 2, City Chambers Level 1 1 Foxglove Heights
12-26 Swanson Street, 142 Featherston Street 79 Cashel Street Wanaka 9305
PO Box 105-926 PO Box 3156 Christchurch
Auckland 1143 Wellington 6140
armillary.co.nz
Me Today Limited
Independent Adviser’s Report and Appraisal Report
In respect of:
• the extension of the Jarvis Trust subordinated note
• the reclassification of MTL Securities’ non-voting ordinary shares to ordinary voting
shares
• the transfer of shares to MTL Securities Limited’s ultimate owners
• the rights issue of up to $2.78+ million new ordinary shares
• the underwriting of up to $2.0 million of the rights issue.
21 February 2024
Statement of independence
Armillary Limited confirms that it:
• has no conflict of interest that could affect its ability to provide an unbiased report and,
• has no direct or indirect pecuniary or other interest in the Transaction considered in the report, including
any success or contingency fee or remuneration, other than to receive a fixed cash fee for providing
this report.
Armillary Limited has satisfied the Takeovers Panel, on the basis of the material provided to the Panel, that it is
independent under the Takeovers Code for the purposes of preparing this report.
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Table of Contents
1 Glossary and defined terms ....................................................................................... 3
2 Overview and details of the transaction .................................................................... 4
3 Regulatory requirements and approval matters ..................................................... 14
4 Evaluation of the merits of the Transaction for the purposes of the Takeovers
Code ................................................................................................................................... 18
5 Evaluation of the fairness of the Jarvis Debt Extension and the Transaction for
the purposes of the NZX Listing Rules ............................................................................ 34
6 Profile of Me Today Limited ...................................................................................... 37
7 Sources of information, reliance on information, disclaimer and indemnity ........ 47
8 Qualifications and expertise, independence, declarations and consents ............. 49
3
1 Glossary and defined terms
In this Report the following terms have the following meanings unless otherwise specified:
Armillary Armillary Limited
Baker Grant Baker
BIT Baker Investment Trust No. 2
BNZ Bank of New Zealand
Board Me Today Limited’s board of directors
Code The Takeovers Code
DCF Discounted Cash Flow
Independent Directors
Directors of the Board who are not, and are not associated with,
MTL or the MTL Associated Shareholders or the Jarvis Trust
Jarvis Debt
A subordinated note (value at 30 June 2023 of $5.40 million)
owing to Jarvis Trust arising from the purchase of King Honey
Jarvis Debt Extension
The proposal to extend the maturity of the Jarvis Debt to 30
June 2026 with a quarterly review from 1 July 2025
Jarvis Trust TW Jarvis (No. 1) Family Trust
Kerr Michael Kerr
King Honey Me Today Manuka Honey Limited
Listing Rules NZX Listing Rules
MEE or the Company Me Today Limited
Me Today or MTB Me Today Brand(s)
MKH M&N Kerr Holdings Limited
MTL MTL Securities Limited
MTL Associated Shareholders MTL, BIT, SIT, and MKH
MTL Distribution
The in-specie distribution of MTL Securities Limited’s shares to
its ultimate owners
MTL Reclassification
The reclassification of MTL Securities Limited’s non-voting
ordinary shares to voting ordinary shares
Non-associated Shareholders Shareholders not associated with MTL Securities
Non-voting Shares
Non-voting ordinary issued share capital in Me Today Limited
(MEE)
Notice of Special Meeting
The notice for the Special Meeting as sent to shareholders
(including this Report)
NZX NZX Limited
Report This report
Resolutions
The four ordinary resolutions to be voted on at the Special
Meeting
Restructure The restructure of Me Today Limited’s operations and debt
Rights Issue The proposed pro-rata non-renounceable rights issue
Shares Ordinary issued share capital in Me Today Limited (MEE)
Sinclair Stephen Sinclair
SIT Sinclair Investment Trust
Special Meeting
The Special Meeting of Shareholders to be held on 8 March to
consider the Resolutions
TERP Theoretical ex-rights price
TGBC The Good Brand Company Limited
Transaction
Refers collectively to the of the MTL Reclassification, Rights
Issue, Underwrite, and MTL Distribution
Underwrite
The proposed underwriting agreement between the
Underwriters and Me Today Limited (MEE)
Underwriters
Baker Investment Trust No. 2 (BIT) and Sinclair Investment
Trust (SIT)
Voting Shares Voting ordinary issued share capital in Me Today Limited
VWAP Volume-weighted average price
$, dollar All $ references are in NZ dollars
4
2 Overview and details of the transaction
2.1 Background
Me Today Limited (“MEE” or the “Company”) is a New Zealand owned and operated
company that specialises in the formulation, marketing, and distribution of a diverse range of
health and beauty products, including mānuka honey alongside a range of supplements,
skincare, and personal care items, with an emphasis on natural and sustainable ingredients.
MEE operates through two primary subsidiaries:
• The Good Brand Company Limited (“TGBC”) which also represents the Me Today
Brand (“Me Today” or “MTB”) and,
• Me Today Manuka Honey Limited (“King Honey”).
MEE currently has 15,437,639 ordinary shares (“Shares”) on issue comprised of 12,957,287
voting Shares (“Voting Shares”) and 2,480,352 non-voting Shares (“Non-voting Shares”).
Only the Voting Shares are listed on the NZX Main Board financial product market operated
by NZX Limited (“NZX”). As at 8 February 2024 MEE was trading at a price of $0.099 per
Share with a market capitalisation (based on the Voting Shares only) of $1.28 million.
MTL Securities Limited (“MTL”) is currently the largest shareholder in MEE. It holds
4,365,785 Voting Shares and all 2,480,352 Non-voting Shares. This provides MTL 33.7% of
the Voting Shares and, with its Non-voting Shares, an overall economic interest in MEE of
44.3%. MTL is ultimately owned by:
• Grant Baker (“Baker”) through Baker Investment Trust No 2 (“BIT”)
• Stephen Sinclair (“Sinclair”) through Sinclair Investment Trust (“SIT”)
• Michael Kerr (“Kerr”) through M&N Kerr Holdings Limited (“MKH”)
Baker, Sinclair and Kerr are directors of MEE and therefore Associated Parties under the
NZX Listing Rules (“Listing Rules”) (collectively referred to as “MTL Associated
Shareholders”). They are also considered associates under the Takeovers Code (“Code”).
King Honey was purchased in June 2021 from the TW Jarvis (No. 1) Family Trust (“Jarvis
Trust”) for a combination of cash, new Shares and a $5.0 million subordinated note (“Jarvis
Debt”). Jarvis Trust currently owns 10.7% of the Voting Shares of the Company and at 30
June 2023 the outstanding Jarvis Debt was $5.40 million.
Further information on the Company is set out in section 6.
2.2 Transactions
MEE intends to restructure its operations to separate the reporting of MEE’s subsidiaries,
TGBC and King Honey, (“Restructure”). This restructure includes amending the debt
structure of MEE’s subsidiaries whereby a portion of King Honey’s bank debt is to be
transferred to MEE with the remaining bank debt being held within, and secured only over
the assets of, King Honey.
The Company’s other material indebtedness is the Jarvis Debt. As part of the Restructure
the maturity date for this debt is to be extended from 30 June 2024 to 30 June 2026 with a
5
quarterly review, linked to some defined financial covenants, from 1 July 2025 (“Jarvis Debt
Extension”).
Another element of the Restructure is a capital raise to ensure the business is adequately
funded and capitalised. The capital raise consists of several separate events:
• reclassification of MTL’s Non-Voting Shares (“MTL Reclassification”)
• an in-specie distribution of MTL’s Shares to the shareholders of MTL (“MTL
Distribution”)
• a pro-rata non-renounceable rights issue (“Rights Issue”), and
• a partial underwrite of the Rights Issue by BIT and SIT (“Underwrite”).
Collectively these four initiatives are referred to as the “Transaction”. Full details of the
impact of each of the elements of the Transaction, and the Jarvis Debt Extension, are set out
in following sections but in very brief summary:
• the Company has agreed to extend the time for repayment of its subordinated debt
obligations with the Jarvis Trust from 30 June 2024 to 30 June 2026.
• the MTL Reclassification would increase the MTL Associated Shareholders control of
the voting rights from 33.7% to 44.3%.
• The Rights Issue strengthens the Company’s balance sheet by raising up to $2.78
million of new share capital which, in turn, enables the Company to restructure its
debt obligations (thus eliminating the need to repay the Jarvis Debt on 30 June
2024).
• The Rights Issue and Underwrite could see a material increase in the MTL
Associated Shareholders collective shareholding. Depending on the participation of
the Non-associated Shareholders, and the extent to which the Underwriters invest
more than the underwritten amount, their control of the voting rights of the Company
could range from 44.3% to 82.8%.
2.3 Special Meeting of Shareholders
MEE is holding a Special Meeting of shareholders on 8 March 2024 (“Special Meeting”) to
vote on a series of resolutions related to the Jarvis Debt Extension and the Transaction.
As part of the Special Meeting there is the requirement for an Independent Adviser’s Report
on the “merits” of the Transaction in accordance with the Code and an Independent
Appraisal Report on the “fairness” of the Jarvis Debt Extension and the Transaction in
accordance with the Listing Rules which together forms this Report (“Report”). Armillary
Limited (“Armillary”) has been engaged by MEE to prepare the Report.
Full details of the Special Meeting will be in the Notice of Special Meeting (“Notice of
Special Meeting”) that will be sent to shareholders along with the Report.
2.4 The Restructure
On 20 December 2023 MEE announced that it had extended the repayment date of its debt
with the Jarvis Trust and that the Bank of New Zealand (“BNZ”) had agreed to continue
6
supporting the business through to 30 June 2026. These extensions form part of the broader
Restructure, also announced on 20 December 2023, that will seek to:
• ring fence King Honey’s operations to keep its financial reporting and operations
clearly separate from the other segments of MEE’s business,
• further amend MEE’s debt facilities so that some of the BNZ debt remains in, and
only secured over, the King Honey business (the debt owed to the Jarvis Trust
remains secured only over the assets of King Honey although it is subordinated to
the BNZ),
• sell the King Honey business with the Jarvis Trust given a non-exclusive mandate to
help sell the King Honey business on behalf of the Company, and
• further reduce costs across the whole company.
These initiatives will proceed independently of the Jarvis Debt Extension and (apart from the
sales process for the King Honey business which is underway, but not complete) have
largely already been given effect to.
Combined with the Rights Issue, and the other elements of the Transaction, the Restructure
is crucial to MEE’s continued operation as it enables the Company to continue focusing on
its core business segments (i.e. Me Today and TGBC) and limit the impact of King Honey’s
poor performance on MEE’s financial position.
The Restructure is dependent on the Jarvis Debt Extension and the Transaction. Without
new capital (i.e. the Rights Issue) MEE would be unlikely to have a strong enough financial
position to seek further changes to its debt facilities nor would it be a position to continue
investing to develop the Me Today business.
2.5 MTL Reclassification
MTL applied for $4.2 million in the Company’s June 2022 rights issue. To ensure compliance
with the Takeovers Code, MTL gave written instruction to the Company to reclassify some of
its existing shares as Non-voting Shares. The terms of the Non-voting Shares provide for
them to be reclassified as Voting Shares if the holder, in this case MTL, gives notice in
writing. As part of the Transaction MTL intends to give that notice so the Company will,
subject to shareholder approval, reclassify the 2,480,352 Non-voting Shares held by MTL as
Voting Shares.
2.6 MTL Distribution
Following the MTL Reclassification MTL intends to undertake an in-specie distribution
whereby all of its MEE Shares are transferred to the underlying shareholders of MTL. The
distribution of the Shares will be split as follows:
• 3,692,080 Shares to BIT
• 2,932,057 Shares to SIT
• 222,000 Shares to MKH
The split of the in-specie distribution reflects the varying ownership levels and associated
internal financing arrangements of MTL.
7
2.7 Rights Issue
MEE intends to undertake a pro-rata Non-renounceable Rights Issue to raise up to $2.78
million in new capital. The proceeds of the Rights Issue will be used to recapitalise MEE as
part of the Restructure. The principal terms of the Rights Issue are:
• The right to subscribe for four new Shares for every nine Shares held.
• The new Shares will be issued at $0.08 each.
• Due to varying legislative requirements some shareholders with offshore registered
addresses may not be eligible to participate in the Rights Issue. All shareholders who
are residents of New Zealand will be eligible to participate.
• The rights are non-renounceable, meaning shareholders cannot sell or transfer any
of their rights.
• Subject to shareholder approval, the Rights Issue will be underwritten to a value of
$2.0 million.
• There is an oversubscription facility for shareholders to apply for Shares in excess of
their pro-rata entitlement.
• Shares up to a maximum value of $2.78 million (subject to rounding) will be allotted
pursuant to the Rights Issue in the following order:
o Shareholders, including MTL, subscribing for their pro-rata entitlement.
o Shareholders, including MTL, applying in the oversubscription facility for
Shares in excess of their pro-rata entitlement (subject to availability, and, if
necessary, allocated on a pro-rata basis).
To give effect to the Underwrite BIT and SIT, as the Underwriters, will apply on behalf of MTL
for its pro-rata entitlement and will then apply, on behalf of MTL, for additional Shares in the
oversubscription facility such that the Underwriters combined applications will total $2.0
million. The Underwriters’ ability to subscribe for the full $2.0m underwritten amount is
subject to shareholder approval. In addition to seeking shareholder approval for the $2.0
million Underwrite the Company is also seeking shareholder approval to allow the
Underwriters to subscribe for up to an additional $750,000 of Shares on top of their $2.0
million underwriting commitment (i.e. seeking shareholder approval for the Underwriters to
have the ability to subscribe for up to 9,375,000 Shares in addition to the 25.0 million Shares
for a total of up to 34.375 million Shares). In addition, approval is being sought to allow for
MKH to subscribe for up to $137,310 (or up to 1,716,379 Shares) in the Rights Issue. These
amounts of additional subscriptions will, if necessary, be scaled to ensure that the maximum
size of the Rights Issue is $2,778,775.
The Rights Issue is expected to be completed by 31 March 2024. The full terms of the Rights
Issue will be set out in the Rights Issue offer documents.
2.8 The Underwrite
Subject to shareholder approval BIT and SIT (the “Underwriters”) have agreed to
underwrite the Rights Issue to the value of $2.0 million or 25.0 million Shares. The split of
the Underwrite is as follows:
8
• BIT will underwrite as to $1,500,000, or 18,500,000 Shares
• SIT will underwrite as to $500,000, or 6,250,000 Shares
To give effect to the underwrite BIT and SIT have agreed to subscribe for the pro-rata
entitlement on behalf of MTL and will then apply for oversubscriptions to give a total
combined application amount of $2.0 million.
Other key terms of the Underwrite are:
• There is no fee for BIT and SIT to underwrite the Rights Issue
• It is not proposed to have any market out clauses in the underwriting agreement.
The resolution relating to the Underwrite also allows for the Underwriters to subscribe for up
to an additional $750,000 of Shares and for MKH to subscribe for up to $137,310 of Shares.
The ability to subscribe for up to 9,375,000 additional Shares ($750,000) is split between BIT
up to 7,031,250 and SIT up to 2,343,750. In practice, we understand that if this approval
were used it would be implemented via the Underwriters subscribing for additional Shares in
the oversubscription facility (where depending on the level of oversubscriptions from the
Non-associated Shareholders they could be subject to scaling).
2.9 Impact on ownership
2.9.1 Ownership prior to the Rights Issue
The table below provides a breakdown of the current ownership of MEE as between MTL,
and shareholders not associated with MTL (“Non-associated Shareholders”).
Current ownership breakdown – Me Today Limited
Voting
shares
% of
Voting
Shares
Non-
voting
Shares
Total
Shares
% of total
MTL Shares 4,365,785 33.7% 2,480,352 6,846,137 44.3%
Non-associated Shareholders
8,591,502 66.3% - 8,591,502 55.7%
Total 12,957,287 100.0% 2,480,352 15,437,639 100.0%
The table below provides a breakdown of the ownership of MEE following the MTL
Reclassification and the MTL Distribution.
Ownership breakdown following the MTL Reclassification and MTL Distribution
Voting Shares % of Voting Shares
BIT 3,692,080 23.9%
SIT 2,932,057 19.0%
MKH 222,000 1.4%
Sub-total MTL Associated Shareholders 6,846,137 44.3%
Non-associated Shareholders 8,591,502 55.7%
Total 15,437,639 100.0%
9
2.9.2 Ownership after the Rights Issue
Subject to shareholder approval, between 25.0 million and 34.735 (rounded) million new
Shares will be issued under the Rights Issue. The table below presents the minimum and
maximum shareholding levels for the MTL Associated Parties (split between MTL and the
Underwriters) and the Non-associated Shareholders following the Rights Issue, depending
on the level of participation by the Non-associated Shareholders.
Commentary:
• Assuming that the MTL Reclassification is approved by shareholders the MTL
Associated Shareholders will retain a 44.3% shareholding if the Non-associated
Shareholders take up their full entitlements under the Rights Issue and the MTL
Associated Shareholders do not receive any oversubscriptions. This is shown in the
minimum scenario.
• The MTL Associated Shareholders maximum level of shareholding following the
Rights Issue is 82.8%. This assumes Non-associated Shareholders collectively do
not subscribe for any Shares while the Underwriters collectively subscribe for a total
of $2.0 million of new Shares in the Underwrite and the full $750,000 of potential
additional subscriptions (after scaling). This is shown in the bottom section of the
table in the “Total potential subscription” row.
• We also present a scenario where the Non-associated Shareholders do not take up
any entitlements in the Rights Issue while the Underwriters take up their full $2.0
million underwriting commitment but do not subscribe for any additional Shares. In
this scenario, shown in the middle of the table in the row “Underwritten amount only”
the MTL Associated Shareholders would own 78.8% of the Shares.
Range of potential shareholding levels
millions Current* Rights
Issue
Post Rights
Issue
% of
total
Minimum MTL Associated Shareholders shareholdings
MTL 6,846,137 - 6,846,137 13.65%
The Underwriters & MKH - 15,403,808 15,403,808 30.70%
Sub-total MTL Associated Shareholders 6,846,137 15,403,808 22,249,945 44.35%
Non-associated Shareholders 8,591,502 19,330,880 27,922,382 55.65%
Total 15,437,639 34,734,688 50,172,327 100.00%
Maximum MTL Associated Shareholders shareholdings – Underwritten amount only
MTL 6,846,137 - 6,846,137 16.93%
The Underwriters & MKH - 25,000,000 25,000,000 61.82%
Sub-total MTL Associated Shareholders 6,846,137 25,000,000 31,846,137 78.75%
Non-associated Shareholders 8,591,502 - 8,591,502 21.25%
Total 15,437,639 25,000,000 40,437,639 100.00%
Maximum MTL Associated Shareholders shareholdings – Total potential subscription
MTL 6,846,137 - 6,846,137 13.74%
The Underwriters & MKH - 34,375,000 34,375,000 69.01%
Sub-total MTL Associated Shareholders 6,846,137 34,375,000 41,221,137 82.75%
Non-associated Shareholders 8,591,502 - 8,591,502 17.25%
Total 15,437,639 34,375,000 49,812,639 100.00%
*includes Voting and Non-voting Shares
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• Unless all shareholders apply for their full pro-rata entitlement additional Shares will
be issued to shareholders who apply for them in the oversubscription facility.
Subject to the level of Non-associated Shareholders participation, the Rights Issue results in:
• the MTL Associated Parties owning between 44.3% and 82.8% of the Shares
• the Non-Associated Shareholders owning between 55.7% and 17.2% of the Shares.
While the extent of the increase is unknown, there is potential that the MTL Associated
Shareholders will increase their level of control of voting rights in the Company above 50%
i.e. they would acquire a controlling interest. We have prepared the chart below which
presents the full continuum of potential shareholder levels following the Rights Issues under
various take up levels by the Non-associated Shareholders. The black line shows MTL’s
holding (of 44.3%) assuming the MTL Reclassification is approved.
The table below shows the minimum and maximum level of ownership of MTL and the
individual MTL Associated Shareholders at each stage of the Transaction concluding with
the Rights Issue.
• In the minimum scenario shown below (i.e. where the Non-Associated Shareholders
collectively subscribe for their pro-rata entitlement) the MTL Associated Shareholders
collective holding remains at 44.3% with the MTL Distribution resulting in this being split
between MTL’s three shareholders i.e. BIT at 22.9%, SIT at 18.0% and MKH at 3.4%.
• The maximum level of shareholding following the Rights Issue for the MTL Associated
Shareholders is 82.8% with BIT holding 57.7%, while the other MTL shareholders (SIT
and MKH) collectively hold 25%. This scenario arises if the Non-associated
Shareholders collectively don’t subscribe for any Shares while the Underwriters
subscribe for a total of $2.0 million pursuant to the Underwrite and the full $750,000 of
potential additional subscriptions (after scaling).
• The impact of the additional up to $750,000 of subscriptions by the Underwriters is
relatively minor. Without this additional investment (i.e. the Underwriters just subscribing
for the $2.0 million underwritten amount) the maximum holding that the MTL Associated
Shareholders could end up with is 78.8%. Adding in the potential for an extra up to $0.75
82.8%
79.0%
75.2%
71.3%
67.5%
63.6%
59.8%
55.9%
52.1%
48.2%
44.3%
-
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
0%10%20%30%40%50%60%70%80%90%100%
Shareholding %
% take up of rights by Non-associated Shareholders
MTL Associated Shareholders shareholding post the Rights Issue -
Total potential subscription
11
million (after scaling) increases the theoretical maximum holding of the MTL Associated
Shareholders by 4.0% to 82.8%.
Impact of the Transaction on ownership – minimum scenario
No. of Voting Shares Current MTL
Reclass-
ification
MTL Dis-
tribution
Rights
Issue
Post Transaction
Mil % Mil Mil Mil Mil %
Non-associated
Shareholders
8.59 66.3% - - 19.33 27.92 55.7%
MTL
4.37 33.7% 2.48 (6.85) - - -
BIT
- - - 3.69 7.80 11.50 22.9%
SIT
- - - 2.93 6.09 9.03 18.0%
MKH
- - - 0.22 1.51 1.73 3.4%
Sub-total MTL
Associated Parties
4.37 33.7% 2.48 - 15.40 22.25 44.3%
Total
12.96 100.0% 2.48 - 34.73 50.17 100.0%
Impact of the Transaction on ownership – maximum scenario (total potential subscription)
No. of Voting Shares Current MTL
Reclass-
ification
MTL Dis-
tribution
Rights
Issue
Post Transaction
Mil % Mil Mil Mil Mil %
Non-associated
Shareholders
8.59 66.3% - - - 8.59 17.2%
MTL
4.37 33.7% 2.48 (6.85) - - -
BIT
- - - 3.69 25.03 28.73 57.7%
SIT
- - - 2.93 7.85 10.78 21.6%
MKH
- - - 0.22 1.49 1.72 3.4%
Sub-total MTL
Associated Parties
4.37 33.7% 2.48 - 34.38 41.22 82.8%
Total
12.96 100.0% 2.48 - 34.38 49.81 100.0%
2.10 Summary of opinions
2.10.1 Takeovers Code
Our evaluation of the merits of the Transaction, as required under the Code, is detailed in
section 4. A brief summary of our opinion as to the primary advantages and disadvantages of
the Transaction, is set out in this section.
The primary positive aspects of the Transaction are:
• There is a strong rationale for the Transaction as it strengthens the Company’s
financial position and enables it to restructure its existing debt obligations.
• Without the Transaction MEE is reliant on alternative sources of funding being
available in the very short term and/or further accommodation from the Company’s
12
lenders. In our opinion this would introduce a high degree of uncertainty to MEE’s
business.
• The Underwrite provides certainty that at least $2.0 million will be raised in the Rights
Issue and the fact of the largest shareholder committing to invest that amount could
be taken as a vote of confidence in the future prospects for MEE.
• All eligible shareholders are able to participate in the Rights Issue (including the over
subscription facility). This means that if the Non-associated shareholders collectively
take up their pro-rata entitlement the MTL Associated Shareholders will not increase
their share of the Company’s voting rights (other than from the MTL Reclassification).
The primary negative aspects of the Transaction are:
• The MTL Associated Shareholders collective level of control of MEE’s voting rights
could increase to as high as 82.8%. In any event, albeit dependent on the level of
participation in the Rights Issue by the Non-associated Shareholders, they are likely
to acquire a controlling stake (i.e. above 50% of the voting rights) and this controlling
interest will be purchased at a discount to the prevailing market price (i.e. no control
premium will be paid).
• The Rights Issue is non-renounceable, meaning shareholders that don’t take up their
entitlements will not be able to transfer or sell their rights.
In our opinion, having regard to the interests of the Non-associated Shareholders and
taking into account all relevant factors, the positive aspects of the Transaction
outweigh the negative aspects.
2.10.2 NZX Listing Rules
Our evaluation of the fairness of the Jarvis Debt Extension and the Transaction, as required
under the Listing Rules, is detailed in section 5. A brief summary of the key factors leading to
our opinions is set out in this section.
• The rationale for the Jarvis Debt Extension is compelling. The interest rate on the
Jarvis Debt is well below a true, current market rate for similar debt. If the extension
is not approved the Jarvis Debt would be repayable on 30 June 2024 and we
consider it unlikely that MEE would be able to refinance the Jarvis Debt on equivalent
terms from any third party financier.
• As it relates solely to a debt instrument, with no voting rights, the Jarvis Debt
Extension has no impact on the voting rights, ownership or control of MEE.
• We consider the rationale for the Transaction is solid.
• In our opinion the terms and conditions of the Rights Issue and Underwrite are
reasonable and we do not consider, at least in the short term, that there are any
viable alternatives to the Underwrite.
• The Transaction has a positive impact on MEE’s financial position and cements the
MTL Associated Shareholders as supportive cornerstone shareholders.
• The single largest negative of the Transaction is the potential for the MTL Associated
Shareholders to acquire a controlling interest in MEE (i.e. in excess of 50% of the
13
Voting Shares) at a discount to the prevailing market price, which itself is
substantially below historic share prices.
In our opinion, having regard to the interests of the Non-associated Shareholders and
taking into account all relevant factors, we consider that the terms and conditions of
the Jarvis Debt Extension and the Transaction are fair.
14
3 Regulatory requirements and approval matters
3.1 Special meeting of shareholders
Shareholders will, subject to their eligibility, vote at the Special Meeting on 8 March 2024 on
five resolutions (the “Resolutions”) to give effect to the Jarvis Debt Extension and the
Transaction.
Resolution 1 – Extension of repayment date of Jarvis Trust subordinated note (Listing
Rule 5.2)
To consider and, if thought fit, pass the following resolution as an ordinary resolution of the
Company:
“To ratify, confirm and approve the extension of the repayment date of the debt owing
to the trustees of the TW Jarvis (No. 1) Family Trust to 30 June 2026 for purposes of
NZX Listing Rule 5.2, as described further in the explanatory notes to the notice of
meeting.”
Resolution 2 – Reclassification of non-voting shares (Rule 7(d) of the Takeovers
Code)
To consider and, if thought fit, pass the following resolution as an ordinary resolution of the
Company:
“To ratify, confirm and approve the reclassification of 2,480,352 non-voting shares to
voting shares for the purposes of Rule 7(d) of the Takeovers Code, as described
further in the explanatory notes to the notice of meeting.”
Resolution 3 – Transfer of shares (Rule 7(c) of the Takeovers Code)
If Resolution 2 is passed, to consider and, if thought fit, pass the following resolution as an
ordinary resolution of the Company:
“For the purposes of Rule 7(c) of the Takeovers Code, to approve the transfer from
MTL Securities Limited of:
(a) 3,692,080 shares to the trustees of Baker Investment Trust No 2, and
(b) 2,932,057 shares to the trustees of Sinclair Investment Trust, and
(c) 222,000 shares to M&N Kerr Holdings Limited,
as further described in the explanatory notes to the notice of meeting.”
Implementation of this resolution is conditional upon Resolution 2 being approved by the
shareholders of the Company.
Resolution 4 – Rights Issue (Listing Rule 4.2.1)
If Resolution 3 is passed, to consider and, if thought fit, pass the following resolution as an
ordinary resolution of the Company:
“To approve the issue of up to 34,734,688 ordinary shares at an issue price of 8 cents
per share to raise up to $2,778,775 (the Rights Issue) for the purposes of NZX Listing
Rule 4.2.1, as described further in the explanatory notes to the notice of meeting.”
15
Resolution 5 – MTL Shareholders participation in the rights issue and Underwriting
(Rule 7(d) of the Takeovers Code, Listing Rule 5.2)
If Resolution 4 is passed, to consider, and if thought fit, pass the following resolution as an
ordinary resolution of the Company:
“To approve the partial underwriting of the first $2,000,000, and potential subscriptions
up to a further $750,000, of the Rights Issues by the trustees of the Baker Investment
Trust No 2 as to 25,781,250 ordinary shares and the trustees of Sinclair Investment
Trust as to 8,593,750 ordinary shares and the potential subscriptions for up to
$137,310, or, up to 1,716,379 shares, by M&N Kerr Holdings Limited for the purpose
of Rule 7(d) of the Takeovers Code and NZX Listing Rule 5.2, as described further in
the explanatory notes to the notice of meeting.”
Implementation of this resolution is conditional upon Resolution 4 being approved by the
shareholders of the Company.
If Resolution 1 is passed but Resolutions 2 to 5 are not, the extension of the repayment date
of the Jarvis Debt could still go ahead although the Company would need to raise additional
funds in another way which could prove to be difficult.
Resolutions 4 and 5 are conditional on each other as both are required to be approved for
the Rights Issue and the Underwrite to proceed.
Resolutions 2 and 3 are independent of resolutions 1, 4 and 5. If the Jarvis Debt Extension,
Rights Issue and the Underwrite are not approved but if Resolution 2 is approved the MTL
Reclassification will still go ahead. If Resolutions 2 and 3 are both approved the
Reclassification (Resolution 2) and the MTL Distribution (Resolution 3) would still proceed
however, in the case of the latter, it would be for a smaller number of Shares.
The trustees of the Jarvis Trust, and any Associated Persons (as defined in the Listing
Rules) are not permitted to vote on Resolution 1.
In relation to resolutions 2, 3, 4 and 5, and pursuant to Rule 17 of the Code, the MTL
Associated Shareholders are prohibited from voting any Shares they hold.
Shareholders should read the section ‘Voting Restrictions’ within the Notice of Special
Meeting for further information.
3.2 Regulatory Requirements
3.2.1 Takeovers Code
MEE’s Shares are listed on the NZX Main Board and as an Issuer the Company is classified
in the Code as a code company.
Rule 6 of the Code, the Fundamental rule, prohibits:
- A person who holds or controls less than 20% of the voting rights in a code company
from increasing its holding or control of voting rights beyond 20%; and
- A person holding or controlling 20% or more of the voting rights in a code company
from increasing its holding or control of voting rights,
16
unless that person and their associates complies with the exceptions to the Fundamental
rule.
One of the exceptions, set out in Rule 7(d) of the Code, enables a person to increase their
holding or control of voting rights by an allotment of Shares if the allotment is approved by an
ordinary resolution of shareholders of the code company.
Rule 7(d) of the Code applies to:
• The MTL Reclassification as it increases MTL’s control of MEE’s voting rights from
33.7% to 44.3% and
• The Underwrite as it may result in the MTL Associated Shareholders increasing their
control of voting rights in MEE from 44.3% (assuming the MTL Reclassification is
approved by shareholders and implemented) up to as high as 82.8%, depending on
the level of Non-associated Shareholder participation in the Rights Issue.
Another exception, set out in Rule 7(c) of the Code, enables a person to increase their
holding or control of voting rights by the acquisition of Shares if the acquisition has been
approved by an ordinary resolution of the code company.
Rule 7(c) of the Code applies to the MTL Distribution as it will see SIT, BIT, and MKH
become holders of up to 57.7%, 21.6%, and 3.4% of MEE’s voting rights, respectively.
Accordingly, Non-associated Shareholders will vote at the Special Meeting on ordinary
resolutions in respect of the MTL Reclassification, the MTL Distribution and the Underwrite
i.e. resolutions 2, 3, and 5.
Rule 18 of the Code requires the directors of a code company to obtain an Independent
Adviser’s Report on the merits of an allotment under rule 7(d) or an acquisition under rule
7(c).
The Independent Adviser’s Report is to be included in, or accompany, the Notice of Special
Meeting pursuant to Rule 16(h).
3.2.2 NZX Listing Rules
MEE’s Shares are listed on the NZX Main Board and as an Issuer the Company is subject to
the Listing Rules.
Listing Rule 5.2.1 states that an Issuer must not enter into a Material Transaction (as that
term is defined in the Listing Rules) if a Related Party (as that term is defined in the Listing
Rules) is, or is likely to become:
• a direct party to the material transaction, or
• a beneficiary of a guarantee or other transaction which is a material transaction,
unless that material transaction is approved by Ordinary Resolution or conditional on such
approval.
The Jarvis Debt Extension is a Material Transaction as the Jarvis Debt exceeds 10% of
MEE’s Average Market Capitalisation (as that term is defined in the Listing Rules). Because
the Jarvis Trust owns more than 10% of the Voting Shares it is a Related Party and so
shareholder approval is required.
17
The Transaction is also a Material Transaction as the Underwrite and the MTL Associated
Shareholders participation in the Rights Issue equates to the potential issue of equity
securities above 10% of MEE’s Average Market Capitalisation.
The MTL Associated Shareholders are related parties under the Listing Rules as the ultimate
owners of BIT, SIT, and MKH (i.e. Baker, Sinclair and Kerr) are directors and / or executives
of MEE, and holders of more than 10% of MEE’s Voting Shares.
Listing Rule 7.8.8(b) states that a notice of meeting for the purpose of Rule 5.2.1 must be
accompanied by an Appraisal Report.
An Appraisal Report is also required by Listing Rule 7.8.5(b) when a meeting will consider a
resolution in respect of the issue of financial products where more than 50% of the financial
products to be issued are intended or likely to be acquired by directors or associated
persons of directors. While there is a continuum of results subject to the level of participation
of the Non-associated Shareholders in the Rights Issue, it is possible that the Shares issued
to the MTL Associated Shareholders (pursuant to the Rights Issue and the Underwrite) will
constitute more than 50% of all of the Shares to be issued in the Rights Issue.
Listing Rule 7.10.2 requires an Appraisal Report to state the appraiser’s opinion, with
supporting reasons, as to whether or not the terms and conditions of the Transaction are fair
to shareholders not associated with the Issuer or its directors, or with any parties to the
transaction. In this Report that means the Non-associated Shareholders.
3.3 Purpose of the Report
MEE’s board of directors (the “Board”) has engaged Armillary to prepare:
• an Independent Adviser’s Report on the merits of the MTL Reclassification, the
Underwrite and the MTL Distribution in accordance with Rule 18 of the Code.
Armillary was approved by the Takeovers Panel on 9 January 2024 to prepare the
Independent Adviser’s Report.
• An Appraisal Report on the fairness of the Jarvis Debt Extension and the Transaction
in accordance with the Listing Rules. Armillary was approved by NZ RegCo on 9
January 2024 to prepare the Appraisal Report.
Armillary issues this Independent Adviser’s Report and Appraisal Report to those directors of
the Board who are not, and are not associated with, directors of MTL or the MTL Associated
Shareholders nor whom are associated with the Jarvis Trust (“Independent Directors”). The
Report is for the benefit of the Non-associated Shareholders to assist them in forming their
own opinion on whether to vote for or against the Resolutions in relation to the Jarvis Debt
Extension and the Transaction at the Special Meeting on 8 March 2024.
We note that each shareholder’s circumstances and objectives are unique. Accordingly, it is
not possible to report on the merits and fairness of the Jarvis Debt Extension and the
Transaction in relation to each individual shareholder. This report on the merits and fairness
of the Jarvis Debt Extension and the Transaction is therefore necessarily general in nature.
This Independent Adviser’s Report and Appraisal Report is not to be used for any other
purpose without our prior written consent.
18
4 Evaluation of the merits of the Transaction for the purposes of the
Takeovers Code
4.1 Basis of evaluation
Rule 18 of the Code requires an evaluation of the merits any proposed acquisition under rule
7(c) or allotment under rule 7(d) having regard to those persons who may vote to approve
the acquisition or allotment.
There is no legal definition of the term “merits” in New Zealand in either the Code or in any
statute dealing with securities or commercial law. In the absence of an explicit definition or
merits, guidance can be taken from:
• the Takeovers Panel Guidance Note on Independent Advisers dated 1 November
2023;
• definitions designed to address similar issues within New Zealand regulations which
are relevant to the Transaction;
• overseas precedents; and
• the ordinary meaning of the term “merits”.
The specific elements of the Transaction that require an Independent Adviser’s Report are
the MTL Reclassification, the MTL Distribution and the Underwrite. The MTL Reclassification
and the MTL Distribution can occur without the Underwrite however, given the inter-linked
nature of the Resolutions, the Underwrite cannot proceed without the MTL Reclassification.
The Rights Issue per se doesn’t require an Independent Adviser’s Report but the
Transaction, and Restructure, are both dependent upon it. Accordingly, while we do address
some of these matters separately, as it is the Company’s intention that it is a complete
package we have focused more on the Restructure and the Transaction as a whole in our
assessment of the merits.
In our opinion, an assessment of the merits of the Transaction should consider:
• the rationale for the Transaction;
• the outlook for MEE without the Transaction;
• the terms and conditions of the Rights Issue;
• the terms and conditions of, and alternatives to, the Underwrite;
• the effect of the Transaction on MEE’s financial position;
• the impact on the control of the Company (with separate consideration given to each
of the MTL Reclassification, the Underwrite and the MTL Distribution);
• the likelihood of a takeover following the Transaction;
• the impact of the Transaction on MEE’s share price and liquidity;
• other benefits and disadvantages to shareholders; and
19
• the implications if the Resolutions are not approved.
Our opinion should be considered as a whole. Selecting only portions, without considering all
the factors and analysis together, could create a misleading view of the factors and process
underlying the opinion.
4.2 Summary of the Evaluation of the merits of the Transaction
Our evaluation of the merits of the Transaction are set out in detail in sections 4.3 to 4.14.
In summary, the positive aspects are:
• there is a strong rationale for the Transaction;
• the outlook for MEE without the Transaction is uncertain and reliant on alternative
sources of funding being available and/or further accommodation from the
Company’s lenders;
• the Rights Issue is of sufficient size that it should enable the ongoing sustainable
operations of MEE;
• all eligible shareholders are able to participate in the Rights Issue. It is critically
important for the Non-associated Shareholders to realise that if they collectively take
up all of their pro-rata entitlement the MTL Associated Shareholders will not increase
their share of the Company’s voting rights (other than from the MTL Reclassification);
• the terms of the Underwrite are favourable;
• while the Rights Issue subscription price is at a significant discount to historic Share
trading prices the discount to more recently traded prices is at the lower end of what
is typically observed in the market;
• the Underwrite provides certainty that the Rights Issue will raise at least $2.0 million
and the fact of the largest shareholder committing to invest that amount could be
taken as a vote of confidence in the future prospects for MEE;
• the Transaction will have a positive impact on MEE’s financial position;
• with more Shares held by the Non-associated Shareholders liquidity, as measured by
the volume of Shares traded on the NZX, may increase (although measured as a
percentage of all the Shares on issue it is reasonable to expect it to decline); and
• without the MTL Distribution the MTL Associated Shareholders would, after the
Rights Issue, be likely to be able to utilise the creep provisions of rule 7(c) of the
Code. However, the effect of the MTL Distribution is that only BIT, and only then if
there is low participation by Non-associated Shareholders in the Rights Issue, might
be able to utilise these provisions.
In summary, the negative aspects are:
• the MTL Associated Shareholders collective level of control of voting rights in MEE
may increase to as high as 82.8%. If the historic level of Non-associated Shareholder
participation in capital raises is repeated the MTL Associated Shareholders would
likely acquire a controlling stake (i.e. above 50% of the voting rights). Any increase in
their percentage holding will be done at a discount to the prevailing market price for
20
the Shares (albeit the extent to which their shareholding does increase is primarily
dependent on the level of participation in the Rights Issue by the Non-associated
Shareholders);
• the Rights Issue is non-renounceable, meaning shareholders that don’t take up their
entitlements will not be able to transfer or sell their rights;
• if participation in the Rights Issue by Non-associated Shareholders is low the MTL
Associated Shareholders would increase their ability to exert control over the
Company (however, we note that with historic voting patterns MTL is already able to
exert a level of control over shareholder votes).
There are both positive and negative aspects associated with the Transaction. In our
opinion, when the Non-associated Shareholders are evaluating the merits of the Transaction,
they need to carefully consider whether the negative aspects could justify voting against the
Resolutions, with the outcome that MEE would be unable to complete the Restructure and in
need of additional funding (which may, or may not be, available) and/or be more reliant on
achieving a positive outcome in respect of the sale of the King Honey business.
In our opinion, considering all relevant factors, the positive aspects of the Transaction
outweigh the negative aspects from the perspective of the Non-associated
Shareholders.
4.3 The rationale for the Transaction
The purpose of the Rights Issue is to raise funds to facilitate the Restructure, the Jarvis Debt
Extension and fund the continued operations of MEE. If fully subscribed the Rights Issue will
raise $2.78 million of new capital.
Given the current financial position, the historic financial performance of MEE and the
Company’s guidance that it expects further losses in the six-month period to 31 December
2023, it is our opinion that the Restructure is critical to ensure the ongoing viability of MEE.
As outlined in section 2.4 the Restructure is a comprehensive proposal to ring fence the Me
Today business from the King Honey business while MEE seeks to sell King Honey. To
enable this the Company sought accommodation from both of its key lenders (BNZ and
Jarvis Trust) while at the same time enabling a partially underwritten equity raising.
Each element of the Transaction is an important part of the whole and the Transaction is
required to enable the Restructure and the Jarvis Debt Extension to be implemented.
In our opinion the rationale for the Transaction, and each element, is sound. It gives the
Company flexibility while it seeks a buyer for King Honey while at the same time ensuring
that funds raised to support the growth of the Me Today business are not used to support
King Honey.
4.4 The outlook for MEE without the Transaction
After reporting a $12.97 million loss in FY23 MEE had Shareholders’ Funds at 30 June 2023
of $11.9 million. The Company had $913,000 in cash but over $12.4 million of debt
(excluding lease liabilities).
Since 2020 (the year MEE acquired TGBC) MEE has incurred accumulated losses of $40.4
million and cumulative operating cash outflows of $21.6 million. The 2021 acquisition of King
Honey accelerated these losses with c.75% of the accumulated loses and operating cash
21
outflows having occurred since that acquisition. To date MEE has primarily funded these
losses through the issuance of new share capital.
MEE is expected to continue incurring losses, for at least the current FY24 financial year,
and so will require ongoing funding as it continues to review its cost base while also
investing in the growth of the MTB segment of its business. Without the Rights Issue MEE
would not be able to continue funding its business operations and would likely be in need of
more accommodation and support from its external lenders. In the absence of alternative
sources of capital, which the MEE Board believe is unlikely to be available, the Company
would likely need to explore deeper cuts to its cost base while at the same time having less
flexibility around the sale of the King Honey business. A further possible scenario is that the
Board may look to appoint a liquidator to wind up the Company.
In our opinion each of these scenarios is likely to see lower returns to existing shareholders.
4.5 Structure of the Rights Issue
4.5.1 Size of the Rights Issue
The Rights Issue and Underwrite is structured so that the Company will raise between $2.0
million and $2.78 million of new share capital. The amount to be raised is based on the
Board’s estimate of the amount of new capital required to recapitalise the business following
the Restructure, facilitate the Jarvis Debt Extension, and to fund the ongoing business
operations (i.e. the Rights Issue has been sized to result in MEE being a sustainable
operation).
A larger rights issue would give the Company more financial flexibility and strengthen its
balance sheet further, however, there is always a balance to be struck with what is
realistically achievable.
In our opinion, on the basis that it is large enough to implement the Restructure (including
the Jarvis Debt Extension), the size of the Rights Issue is reasonable.
4.5.2 Non-renounceable
The rights are non-renounceable, meaning that they cannot be transferred or sold. This is a
negative for shareholders that do not wish to participate in the Rights Issue as it does not
provide any opportunity for these shareholders to realise the value of their rights.
We understand that the Company’s decision to make the rights non-renounceable was
primarily to minimise the cost to the Company while also simplifying the Rights Issue as
much as possible.
With the oversubscription facility available to shareholders (which equates to buying extra
rights for zero consideration) it is unlikely that there would be much, if any, demand for rights
if they were renounceable. Accordingly, we consider the Board’s decision is reasonable.
4.5.3 Eligible Shareholders
The Rights Issue is only open to shareholders with registered addresses in New Zealand,
Australia or such other places where a shareholder can satisfy the Company that the Rights
Issue can lawfully be made and accepted. Shareholders in the United States are not eligible
to participate in the Rights Issue. Similarly, shareholders (including trustees, Custodians and
nominees) who hold Shares on behalf of persons in the United States, or are acting for the
22
account or benefit of persons in the United States, are not eligible to participate in the Rights
Issue on behalf of those persons.
Although we are unable to ascertain whether there are NZ registered shareholders holding
Shares on behalf of persons in the USA, we understand that as at 10 January 2024 there
were only four shareholders, collectively holding 214,000 Shares, with a registered address
outside of NZ or Australia. Accordingly, we consider the Board’s approach to shareholder
eligibility as reasonable.
4.6 Pricing of the Rights Issue
Based on the closing Share price on 8 February 2024 of $0.099 the Rights Issue is priced at
a 19.2% discount to the prevailing share price and a 6.8% discount to the theoretical ex-
rights price (“TERP”)
1
of $0.0858. This level of discount is at the lower end of the range of
discounts observed for rights issues in New Zealand.
A lower discount to the TERP makes the Rights Issue less attractive to existing shareholders
as it increases the cost of participation and means there is a smaller bonus element within
the Rights Issue. However, in reverse it results in less dilution for shareholders that do not
participate in the Rights Issue.
The relatively low discount to the TERP also needs to be considered in the context of the
price of the Shares which fell substantially over the course of 2023 i.e. the pricing of the
Rights Issue is at a bigger discount to historic share prices.
We have not undertaken a detailed valuation analysis of MEE. In part this is because we do
not have the detailed, medium term financial projections required for a Discounted Cashflow
(“DCF”) valuation. In addition, each business division, and the Company as a whole, has
operated at an EBITDA loss for each of the last two financial years meaning we have no
guidance as to what level of earnings would be appropriate to use in a capitalisation of
earnings valuation. Further complicating any valuation analysis is the fact that the Company
and its subsidiaries are highly indebted (with over $12 million of debt owing to BNZ and the
Jarvis Trust), King Honey has substantial inventory holdings of honey (at June 2023 it was
over 2 years of sales which, if sold, could generate substantial levels of cashflow) and King
Honey (the largest subsidiary) operates in an industry where it is exposed to a number of
factors outside of the Company’s control.
In the absence of this information, and in the context of the Company actively looking to sell
King Honey, we have turned to the valuation information in the 2023 annual report. We have
considered:
• The Company’s internal DCF valuation of King Honey in support of its goodwill
impairment testing analysis. At 30 June 2023 this value was $21.1 million (excluding
any debt or cash in King Honey).
• The Book Value of all other business operations (i.e. excluding King Honey) at 30
June 2023 was $3.1m (excluding any debt or cash).
We suspect that given the history of trading losses in each of the businesses both would be
valued at a discount to their book values. However, in the absence of any detailed analysis
of all the underlying assumptions and information, we have calculated a value for MEE
1
The TERP is the market price that a stock will theoretically have following a rights issue.
23
based on varying percentages of these values. Purely for illustrative purposes, we present
the following analysis:
As shown in the following table there is a wide range of possible outcomes with the key
determinant being the value for King Honey. If King Honey can be sold for at least 60% of
the Company’s historic assessed value then, in most scenarios, a valuation of MEE would
be in excess of the $0.08 Rights Issue subscription price. In some scenarios the premium
could be substantial. However, there are scenarios where the Shares would be worth less
than the Rights Issue subscription price.
Indicative asset value based valuation of MEE (based on Company assessed values /
book value at 30 June 2023)
Me Today Value % of Book Value
0% 20% 40% 60% 80% 100%
King Honey %
of assessed
value
50% ($0.06) ($0.02) $0.02 $0.06 $0.10 $0.14
60% $0.07 $0.11 $0.15 $0.19 $0.23 $0.27
70% $0.21 $0.25 $0.29 $0.33 $0.37 $0.41
80% $0.35 $0.39 $0.43 $0.47 $0.51 $0.55
90% $0.48 $0.52 $0.56 $0.60 $0.64 $0.68
100% $0.62 $0.66 $0.70 $0.74 $0.78 $0.82
This sensitivity table is provided for illustrative purposes. We note that the losses incurred
since June 2023 would mean that a current valuation on the same basis would be lower than
the numbers presented above.
In addition, there are a range of factors that contribute to a valuation including projected
financial performance, future growth rates, the general level of interest rates and investor
perceptions as to the specific risk factors of King Honey. Relatively small changes in
underlying assumptions can result in large changes to the valuation result. In particular, we
note that results in the current financial year are lower than the Company’s expectations at
the time of undertaking this internal valuation.
Shareholders need to consider, among other matters, the likelihood of MEE being able to
sell King Honey and, if so, at what price. If King Honey is able to be sold, shareholders also
need to make an assessment as to the Company’s ability to manage its corporate overhead
costs and improve the performance of the other business units so that it can generate profits
in the Me Today division.
Indicative asset based valuation of MEE (based on Company assessed values / book
value at 30 June 2023)
NZ$m Value Assumed % Indicative Value
King Honey
21.1
70%
14.8
All other business activities
3.1
60%
1.9
Enterprise Value
16.6
Net Debt (at 30 June 2023)
(11.5)
Implied, indicative Equity Value
5.1
Implied, indicative Equity Value (per share) $0.33
24
In assessing the merits of the pricing of the Rights Issue we place more emphasis on the
relativity to more recent Share prices than its relativity to historic share prices and whether it
is a discount or premium to a hypothetical underlying value. The subscription price is at a
large discount to the historic share price trading ranges of the Shares however MEE’s
financial results have continued to be poor, with the Rights Issue being the third capital raise
announced since the 2021 acquisition of King Honey.
The Rights Issue is being offered on a pro-rata basis so each shareholder has the ability to
maintain their relative percentage holding. In addition, the discount to the TERP is at the
lower end of what we typically observe in the marketplace meaning that there is less dilution
for those shareholders who elect not to, or are unable to, participate in the Rights Issue.
Overall, we consider the pricing of the Rights Issue to be reasonable from the point of view
of the Non-associated Shareholders.
4.7 Underwriting
It is proposed that the Rights Issue be partially underwritten, with BIT and SIT committing to
underwrite the first $2.0 million of the issue, thus providing certainty that MEE will raise at
least $2.0 million. While not part of the formal underwriting agreement shareholder approval
is also being sought for the Underwriters to subscribe for up to an additional $750,000 of
Shares and for MKH to subscribe for up to $137,310 i.e. to a total of $2.75 million (after
scaling, if any).
4.7.1 The Underwrite
MEE had the following options in relation to underwriting the Rights Issue:
• the Underwrite as proposed
• seeking an alternative underwriter (and for a smaller, or larger, amount)
• proposing a non-underwritten Rights Issue
4.7.2 The Underwrite as proposed
The Underwriters will not charge an underwriting fee; however, the Underwriters will have
the ability to purchase Shares above the level they would otherwise be entitled to (calculated
on the basis of proportion of the MTL entitlement that the two underwriters would be entitled
to on a look-through basis), potentially diluting Non-associated Shareholders
2
.
Underwriting fees vary and are typically a function of the size of the rights issue relative to
the market capitalisation prior to the issue (i.e. the larger the relative size generally the
higher the fee), the discount of the subscription price to the TERP (i.e. generally speaking
the lower the discount the higher the fee) and such other factors that the underwriters
consider in assessing the likelihood that they will be called upon to purchase any shortfall.
In this case the issue is a large one (the underwritten amount is 131% of MEE’s market
capitalisation including the Non-voting Shares), the subscription price is at a relatively low
discount to the TERP and with the relatively high level of operational and financial risks that
the Company currently faces we would expect an underwriting fee to be at the high end of
observed rates and be at least 5.0% of the underwritten amount.
2
We note that in the absence of the Underwrite the MTL Associated Shareholders could, through MTL, utilise the
Oversubscription facility to purchase more than their pro-rata entitlement.
25
4.7.3 Alternative underwriters
The Board has advised that it does not believe alternative underwriters could be obtained.
Armillary agrees with the Board’s assessment and considers it unlikely that MEE would have
been able to secure an alternative underwriter given:
• the small size and market capitalisation of the Company;
• MEE’s current financial performance (i.e. high levels of debt and losses in each
division);
• the lack of institutional investors on MEE’s share register (although an alternative
underwriter could reasonably assume that MTL would take up at least its 44.3%
entitlement of the $2.78 million issue i.e. subscribe for $1.23 million); and
• the limited liquidity of MEE’s Shares.
Even if an alternative underwriter could be found we consider it unlikely that they would be
willing to underwrite the Rights Issue for zero fee.
4.7.4 No underwriter
Having a non-underwritten issue was an option for MEE. However, in our experience, this
would likely lead the Company to set the Rights Issue subscription price at a bigger discount
to the TERP than it has so as to encourage uptake by shareholders. Even then a large
discount would not guarantee the full subscription for the Rights Issue with other factors that
can impact the level of participation including:
• the liquidity of the Shares and spread of shareholders;
• the level of required investment, both in absolute terms and relative to the market
value of each holder’s shareholding;
• the proposed use of the Rights Issue proceeds (i.e. is it to cover losses and/or repay
debt or be invested for growth?); and
• the general state of equity markets.
Some of these factors can be mitigated through the structure of a rights issue, however, we
note that given:
• the low discount to TERP;
• the low demand for MEE’s Shares (based on volumes traded over the last 12-months
and the level of participation by shareholders in previous capital raisings), and
• recent poor financial performance,
we are of the view that MEE would have a very low probability of raising the underwritten
amount if it elected to have a non-underwritten rights issue.
Overall, on the basis that the Underwriters are not charging a fee for underwriting the Rights
Issue and that the Non-associated Shareholders have the ability to minimise the dilutive
impact of the Underwrite by taking up at least their pro-rata entitlements, Armillary considers
the Underwrite to be favourable to MEE and the Non-associated Shareholders.
26
4.8 Impact on financial position
We have prepared a pro-forma balance sheet illustrating the impact on MEE’s financial
position if it had received the proceeds of a fully subscribed Rights Issue at 30 June 2023.
While NAV per share would have fallen from $0.77 to $0.29 the overall impact on MEE’s
financial position is positive. With the increase in shareholders’ funds, and the decline in
debt, net debt as a percentage of equity would have dropped from 103.3% to 64.9% and net
debt to total assets would have been 32.1% rather than the 45.7% reported.
Pro-forma financial position – Me Today Limited
As at 30 June Rights Post Rights
NZ$000’s 2023 Issue Issue
Total assets 26,950 2,780 29,730
Total liabilities (15,017) - (15,017)
Total equity 11,933 2,780 14,713
Net debt 12,327 (2,780) 9,547
Net debt / equity 103.3% nm 64.9%
Net debt / total assets
45.7% nm 32.1%
No. of Shares (000’s) 15,438 34,750 50,188
Net assets 11,933 2,780 14,713
Net assets per Share $0.77 $0.08 $0.29
We understand from MEE’s Board that its internal forecasting shows that the Transaction
and subsequent Restructure results in MEE’s operations being financially sustainable over
the medium-term.
In our view it is relevant to assessing the merits of the Transaction that the level of new
share capital being raised is enough for the Company’s lenders (BNZ and the Jarvis Trust) to
provide the Company with additional accommodation in relation to their existing advances.
We consider that the Transaction leads to a marked improvement in the Company’s financial
position from the current weak, and financially exposed, position.
4.9 Impact on control
4.9.1 Share capital and shareholders
MEE currently has 12,957,287 Shares on issue held by 794 shareholders (further detail on
MEE’s share capital and shareholders is set out in section 6.3).
MEE currently has two substantial shareholders, MTL (33.7%) and the Jarvis Trust (10.7%).
The Underwriters are two of the ultimate owners of MTL, as such the analysis assumes that
the MTL Associated Shareholders are, and will continue to be, associates and so our
analysis of the control position focuses on MTL in aggregate.
4.9.2 Voting level scenarios
MTL’s current level of voting rights (33.7%) enables it to block, but not pass special
resolutions (which require the approval of 75% of the votes cast by shareholders) but does
27
not enable it to pass or block ordinary resolutions (which require the approval of 50% of the
votes cast by shareholders).
Incorporating only the MTL Reclassification the MTL Associated Shareholders control of
voting rights would increase to 44.3%. They would still be able to block, but not pass, special
resolutions and they would not control enough voting rights to guarantee being able to
singlehandedly pass, or block, any ordinary resolutions.
Adding in the impact of the Rights Issue and the Underwrite, including the ability to subscribe
for Shares in addition to the $2.0 million underwriting commitment, it is most likely that the
MTL Associated Shareholders’ ability to influence the outcome of shareholder voting will
increase. The only scenario it doesn’t increase (i.e. it would remain unchanged) is if the Non-
associated Shareholders collectively take up 100% of their pro-rata entitlement. Anything
less than 100% take-up by the Non-associated Shareholders and the MTL Associated
Shareholders control of voting rights will increase from 44.3% (being the level it will be at
immediately after the MTL Reclassification but prior to the Rights Issue).
It requires approximately 85% take up by the Non-associated Shareholders to prevent the
MTL Associated Shareholders from gaining enough control (i.e. at least 50% of the voting
rights in the Company) to singlehandedly pass, or block, any ordinary resolution that they
are entitled to vote on.
At the other end of the scale provided the Non-associated Shareholders collectively take up
at least 20.5% of their pro-rata entitlement (i.e. if they collectively subscribed for c.$0.32
million), the MTL Associated Shareholders would not go above 75% of the voting rights and
so they would not have sufficient control to singlehandedly pass, or block, any special
resolution that they are entitled to vote on.
However, it is important to note that in practice, not all shareholders cast votes at
shareholder meetings. Our analysis of meetings from the 2020 annual meeting onwards
shows that on average 54.5% of the voting rights have been exercised. However, MTL
accounts for a large proportion of this as on average only 12.8% of the Shares held by the
Non-associated Shareholders have voted at shareholder meetings.
Unless voting patterns after the Transaction are substantially different to the historic level the
MTL Associated Shareholders:
• would almost certainly be able to collectively pass, or block, ordinary resolutions
(irrespective of the level of Non-associated Shareholder participation in the Rights
Issue)
• could well have the ability to collectively pass special resolutions however, this is
dependent on the Non-associated Shareholders participation in the Rights Issue.
It is important to note that the ability for any shareholder to influence the outcome of voting
on the Company’s ordinary or special resolutions may be reduced by other means such as
MEE’s constitution, the Code, the Listing Rules, and the Companies Act 1993.
If approved by shareholders, the Transaction will increase the MTL Associated Shareholders’
ability to exert voting control over the Company, although, we note that due to the current
low level of Non-associated Shareholder participation in voting at shareholder meetings MTL
is already able to exert significant voting control.
The impact of the MTL Distribution is to distribute MTL’s shareholding in MEE to the three
shareholders of MTL i.e. Baker (BIT), Sinclair (SIT) and Kerr (MKH).
28
At the maximum holding for the MTL Associated Shareholders of 82.8% of MEE the split
between the three shareholders of MTL would be BIT 57.7%, SIT 21.6% and MKH at 3.4%.
While we assume that at least initially the three parties would act in concert with regards to
voting that relationship could change over time and, in any event, any of the three parties
may sell some Shares.
In this maximum scenario BIT would have enough to singlehandedly pass, or block, ordinary
resolutions. BIT would hold enough Shares to be able to block special resolutions and, given
less than 100% voter turnout, SIT would potentially have the same ability.
In practical terms the MTL Distribution transfers the control that MTL would have to BIT so
there is no material difference for the Non-associated Shareholders of just the MTL
Distribution. If anything, Sinclair is exposed to a potential loss of control (although, in part,
that depends on how decisions are made within MTL).
If the MTL Associated Shareholders end up at the bottom end of the range (i.e. it remains at
the same 44.3% after the MTL Reclassification), the resultant shareholdings after the MTL
Distribution would be BIT 22.9%, SIT 18.0% and MKH 3.4%.
In this scenario, BIT would almost certainly be able to block special resolutions but any other
level of control (i.e. the ability to pass or block resolutions) would depend on the level of
voter participation by the Non-associated Shareholders. At this low end the MTL Distribution
is generally more positive for the Non-associated Shareholders as the control that MTL
would have is spread across the three MTL shareholders.
In our opinion, and viewed in isolation of the Underwrite and the Rights Issue, the MTL
Reclassification and the MTL Distribution have limited practical impact on the MTL
Associated Shareholders level of control over MEE. In addition to currently being able to
block any Special Resolution the MTL Associated Shareholders are in practice, based on the
historic low levels of voting by the Non-associated Shareholders, currently able to pass or
block any ordinary resolution that they are able to vote on. Although they do increase their
voting control within the ‘no-fly’ zone of the Code, in the absence of the Underwrite and the
Rights Issue the MTL Associated Shareholders’ level of control will remain dependent upon
the voting patterns of the Non-associated Shareholders.
It is the Rights Issue and the Underwrite, particularly when coupled with less than 100%
shareholder voting turnout, which has the potential to significantly increase the level of voting
control that the MTL Associated Shareholders have. In most scenarios the MTL Associated
Shareholders control of voting rights will go above 50% and it is possible that it could go
above 75%. In any event, if the historic voting pattern of the Non-associated Shareholders
doesn’t change, it is likely that they would be able to control over 75% of the votes and thus
pass Special Resolutions.
The potential impact of the up to $750,000 (after scaling) of additional subscriptions by the
Underwriters and MKH (over and above the Underwriters $2.0 million underwriting
commitment) is to increase the theoretical maximum shareholding of the MTL Associated
Shareholders from 78.8% to 82.8% (i.e. an increase of 4.0%). While seemingly a small
percentage there may be scenarios where this additional investment could be enough to
increase the MTL Associated Shareholders over the 50% control threshold or, assuming
much lower levels of participation by the Non-associated Shareholders, over the 75% control
threshold (at which point they could be guaranteed to pass any special resolution that they’re
entitled to vote on).
Any potential level of increased influence and control is curtailed by regulation and
legislation and, more importantly, Non-associated Shareholders have the ability to limit the
29
increase in voting control by their collective level of participation in the Rights Issue and their
subsequent participation in voting at shareholder meetings.
4.9.3 Ability to creep
Rule 7(e) of the Code, the creep provision, enables shareholders holding more than 50%,
and less than 90%, of the voting securities in a code company to buy up to an additional 5%
of that company’s shares in any 12 month period without the need for shareholder approval.
Following the Transaction the MTL Associated Shareholders are likely to collectively control
more than 50% of the voting rights in MEE meaning that if the MTL Distribution was not
implemented MTL would be able to utilise the creep provisions. However, we assume that
the MTL Distribution will be implemented and importantly the creep provisions only apply to
individual shareholders rather than the combined holdings of associates.
There are scenarios, with lower levels of Non-associated Shareholder participation in the
Rights Issue, that after the MTL Distribution BIT ends up holding over 50% of the Shares.
We estimate that if the Non-associated Shareholders collectively take up less than c.15% of
their Rights Issue entitlements BIT will hold over 50% of the Shares. In these scenarios BIT
would be able to utilise the creep provisions although it could only purchase any additional
Shares 12 months after completion of the Transaction.
The creep provisions are of no relevance to SIT (which will be holding c.20%) or MKH
(holding under 5%).
4.9.4 Board control
MEE currently has six directors, three of which are the shareholders of MTL. The Company
has not advised us of any planned changes to the Board however as the appointment, and
removal, of directors requires an ordinary resolution BIT (in particular) and the MTL
Associated Shareholders collectively will have a significant level of control over board
appointments.
The level of control that BIT and the MTL Associated Shareholders will have over director
appointments and removals will be dependent on, inter alia, on the level of Non-associated
Shareholder participation in the Rights Issue along with the provisions of MEE’s constitution
and the Listing Rules (e.g. the requirement to have at least two independent directors).
4.9.5 Operations
Two of the MTL Associated Shareholders are currently employed in executive positions
within MEE (i.e. Sinclair as CFO and Kerr as CEO). Any increase in voting rights of the MTL
Associated Shareholders is therefore unlikely to provide any additional level of control or
influence over the day-to-day operations of MEE.
4.10 Impact on the likelihood of a Takeover Offer
The impact of the Transaction is to increase MTL’s share of the Company’s voting rights
from 33.7% to somewhere between 44.3% and 82.8% (although the MTL Distribution
distributes these Shares to the three underlying shareholders).
The MTL Associated Shareholders would only be able to increase their shareholding in MEE
if they (individually or in concert):
• Made a full or partial takeover offer;
30
• Acquire shares (through an allotment or acquisition) that is approved by way of an
ordinary resolution of the Non-associated Shareholders;
• If the Company undertakes a share buyback that is approved by shareholders and
the MTL Associated Shareholders do not participate in the buyback; and / or
• Comply with the creep provisions of rule 7(e) of the Code (see section 4.9.3).
The Transaction may reduce the likelihood of a full takeover offer from the MTL Associated
Shareholders as they may consider that they already have sufficient control over MEE. In
addition, if they were to make a full takeover offer it is possible that they would offer a lower
control premium than otherwise as they may consider they don’t need to pay a large
premium for the remaining Shares.
However, the MTL Associated Shareholders may be motivated to make a full takeover (i.e.
move to 100% control and delist from the NZX) as that would remove many of the regulatory
costs and constraints (e.g. the Listing Rules and the Code) that impact MTL’s shareholding
and the Company today.
It is similarly difficult to tell what the impact on the likelihood of a takeover offer from one or
more independent, third parties would be if the MTL Associated Shareholders were to end
up with a controlling interest in the Company (i.e. over 50% share of the voting rights).
• It may reduce the likelihood of such a takeover offer as any third party would have to
ensure that the MTL Associated Shareholders accept any offer; or
• It may increase the likelihood of a takeover offer from third parties as they would only
have to reach agreement with the MTL Associated Shareholders to be ensured of
achieving a significant level of control over the Company.
4.11 Impact of the Transaction on MEE’s share price and liquidity
4.11.1 Share price
A summary of MEE’s daily share price and monthly volumes of shares traded is set out in
section 6.9.
Over the last 12-months MEE’s Shares, adjusted for the 100:1 consolidation in January
2024, have traded between $0.09 and $1.50 with a volume-weighted average price
(“VWAP”) of $0.391.
While the Rights Issue subscription price ($0.08) is a c.20% discount to the current market
price it is, given the steady decline in the MEE share price, at a much larger discount to the
historic VWAP.
The Rights Issue subscription price is a 6.8% discount to the TERP (of $0.0858). Whether
the Shares trade at, above, or below the TERP following completion of the Rights Issue is
subject to a number of factors, such as:
• The impact of such a relatively large rights issue (i.e. if the full $2.78 million is raised
that would be c.180% of the current market capitalisation (including Non-voting
Shares));
• Share trading liquidity (discussed in the next section);
31
• Investor expectations for future performance (in particular, the extent to which the
current poor financial results, the high level of debt and the need for the Rights Issue
have already been incorporated into the share price);
• Investor expectations of the Company’s ability to sell King Honey (and, in particular,
sell for an amount greater than the level of debt secured over the business); and
• General equity market conditions.
4.11.2 Liquidity
As set out in section 6.9 trading in MEE’s Shares is relatively thin. The level of Non-
associated Shareholder participation in the Rights Issue will ultimately determine the impact
on liquidity. While the Non-associated Shareholders percentage ownership of MEE will most
likely fall as a result of the Transaction they will collectively hold a greater number of
Shares
3
.
Accordingly, while liquidity measured as a percentage of the Company’s Shares that trade in
any period is likely to decline after the Transaction the actual number of Shares traded is
likely to increase.
Non-associated Shareholders should note that the level of trading of the Company’s Shares
will also be influenced by a range of factors including general equity market conditions and
investor expectations of MEE’s future performance.
4.12 Other advantages and disadvantages
4.12.1 Advantages for the Non-associated Shareholders
There are several advantages for the Non-associated Shareholders:
• Equal opportunity to participate: The Rights Issue is a pro-rata offer to all
shareholders. All shareholders who are residents in New Zealand (and certain other
jurisdictions) have the opportunity to take up their entitlements to acquire new
Shares. With an over subscription option shareholders have the ability (subject to the
potential for scaling) to increase their respective percentage holdings. If all
shareholders take up their entitlements the MTL Associated Shareholders will not
increase their voting rights (other than from the MTL Reclassification).
• Benefit of cornerstone shareholder(s): The primary benefit of the Rights Issue
being underwritten is that it gives MEE certainty of raising at least $2.0 million in new
capital from the Rights Issue. The fact that parties associated with the Company’s
largest shareholder have committed to invest a substantial amount of money could
be taken as a vote of confidence in the future prospects for MEE.
• Strengthened financial position. The minimum $2.0 million of new share capital
raised in the Rights Issue directly strengthens MEE’s balance sheet, and as it also
enables the Restructure and the Jarvis Debt Extension to be implemented it leads to
a further indirect improvement in MEE’s financial position. The primary indirect
benefit of the Restructure is that the majority of the Company’s debt will be secured
only against King Honey thus providing MEE with flexibility as it seeks to sell that
3
The only scenario where this isn’t the case is if there is zero participation by the Non-associated Shareholders in the Rights
Issue. We consider this scenario to be most unlikely.
32
business while at the same time ensuring that the funds raised in the Rights Issue
are able to be deployed directly into the Me Today business.
4.12.2 Advantages for the MTL Associated Shareholders
There are several advantages for the MTL Associated Shareholders:
• Increased control: The Transaction provides the MTL Associated Shareholders with
the possibility to increase their shareholding and level of control in MEE to a
significant degree, and at a price that is materially lower than historic trading prices.
However, the extent to which this possibility eventuates is primarily dependent on
whether Non-associated Shareholders choose to take up their Rights Issue
entitlements or not.
• Increased autonomy over shares: the MTL Reclassification and MTL Distribution
provide the MTL Associated Shareholders direct control over a portion of MTL’s
shares. This provides the individual MTL Associated Shareholders more autonomy
over voting or Share trading decisions.
4.12.3 Disadvantages for the Non-associated Shareholders
There are several disadvantages for the Non-associated Shareholders:
• No control premium. It is generally accepted that when someone acquires a
controlling stake in a company (i.e. acquires more than 50% of the voting securities)
that the price paid should represent a premium to the prevailing market price. The
level of the premium can vary substantially but is typically at least 20%. In the event
that the MTL Associated Shareholders do acquire a controlling interest (i.e. move
from 44.3% immediately after the MTL Reclassification to over 50% pursuant to
acquiring Shares as part of their underwriting commitment) they will be doing so at a
discount to the prevailing market price i.e. $0.08 compared to the TERP of $0.0858.
There is an implicit additional cost to the Underwriters above the $0.08 subscription
price as they would normally expect to receive a fee for partially underwriting the
Rights Issue (rather than doing it for zero fee as is proposed).
• Non-renounceable rights: The Rights Issue is non-renounceable, meaning
shareholders who choose not to participate will not be able to benefit from the sale or
transfer of their rights. Shareholders will have to choose between participating in the
Rights Issue or being diluted.
4.12.4 Disadvantages for the MTL Associated Shareholders
There are several disadvantages for the MTL Associated Shareholders:
• Increased exposure to the risks of MEE: as outlined in section 6.5 there are a
number of risks related to MEE. As the MTL Associated Shareholders level of
investment, and percentage ownership, increases so does their exposure to these
risks.
• Further financial commitments: in the event that further capital beyond the Rights
Issue is required by MEE the MTL Associated Shareholders will be required to invest
a larger amount of capital or accept being diluted in any capital raise. As cornerstone
shareholders it is likely that any decision by the MTL Associated Shareholders to not
participate would negatively impact any future capital raise.
33
• Limited control over the outcome of the Transaction: the MTL Associated
Shareholders have minimal influence over the level of any increase in their
ownership and control of MEE as the level of any increase will be determined by the
Non-associated Shareholders level of participation in the Rights Issue.
4.13 Implication of the Resolutions not being approved
If the Resolutions are not approved, then the Underwrite and Rights Issue will not be able to
proceed. In turn, this is likely to mean that the Restructure and the Jarvis Debt Extension
could not be implemented and that TGBC and MTB would not be insulated from King Honey
and its associated debt.
In particular, if Resolution 1 is not approved the Jarvis Debt would remain due for repayment
on 30 June 2024.
Unless the Company could raise sufficient funds from alternative sources in the near-term,
and/or seek further accommodation from its lenders, MEE would most likely have to consider
deeper cuts to its cost base and / or a less measured approach to the proposed sale of King
Honey. Extrapolating those scenarios, the Board could end up in the position of having little
option but to appoint liquidators to the Company and wind up the business. In our opinion,
each of these scenarios are likely to generate reduced returns to shareholders.
4.14 Voting for or against the Resolutions
Voting for or against the Resolutions is a matter for individual shareholders based on their
own views as to value and future market conditions, risk profile, and other factors.
Shareholders should consider these consequences and consult their own professional
adviser.
34
5 Evaluation of the fairness of the Jarvis Debt Extension and the Transaction
for the purposes of the NZX Listing Rules
5.1 Basis of evaluation
NZX Listing Rule 7.10.2 requires an Appraisal Report to consider whether or not, in the
opinion of the Appraiser, the consideration and terms and conditions of the Jarvis Debt
Extension and the Rights Issue are fair to the holders of equity securities other than those
associated with Jarvis Trust and MTL respectively, and the grounds for that opinion.
As with the evaluation of the merits there are specific elements of the Transaction that
require an Appraisal Report, however, we have focused on the Transaction as a whole in
considering the fairness.
This Report is addressed to the Independent Directors of MEE. In respect of the Jarvis Debt
Extension, it is for the benefit of all shareholders other than the Jarvis Trust. In respect of the
Transaction, it is for the benefit of the Non-associated Shareholders
There is no legal definition of the term “fair” in either the NZX Listing Rules or in any statute
dealing with securities or commercial law. However, it is generally considered that an
assessment of the fairness of a transaction (as required under the Listing Rules) is a
narrower test than an assessment of the merits of a transaction (as required under the
Code). Notwithstanding this we have evaluated the fairness of the Jarvis Debt Extension and
the Transaction on essentially the same terms as we evaluate the merits of the Transaction
and have given regard to:
• the rationale for the Jarvis Debt Extension and the Transaction;
• the terms and conditions of the Jarvis Debt Extension and the Transaction;
• potential alternatives to the Jarvis Debt Extension and the Transaction;
• the potential impact of the Transaction on ownership and control of the MTL
Associated Shareholders;
• other advantages and disadvantages to shareholders; and
• the implications of the Resolutions not being approved.
Our opinion should be considered as a whole. Selecting only portions, without considering all
the factors and analysis together, could create a misleading view of the factors and process
underlying the opinion.
5.2 Evaluation of the fairness of the Jarvis Debt Extension
In our opinion, after giving due regard to all of the relevant factors, when viewed as a
whole we consider that the terms and conditions of the Jarvis Debt Extension are fair
to the shareholders other than the Jarvis Trust.
The background for the basis of our opinion is set out in detail in sections 4.3 to 4.14. In
summary the key factors leading to our opinion are:
• The rationale for the Jarvis Debt Extension is compelling. The Company needs to
strengthen its balance sheet as much as possible and to ensure that it has as much
financial flexibility as possible while it explores the sale of the King Honey business.
35
• The terms and conditions of the Jarvis Debt Extension are reasonable. The debt is
subordinated debt with security only over a portion of the Company. The 4.0% p.a.
interest rate is well below the cost that the Company would have to pay if it was even
able to secure alternative third party debt financing.
• Given MEE’s poor financial results, current level of debt and commentary in relation
to continued difficulty in the honey markets we do not consider that there are any
viable alternatives to the Jarvis Debt Extension i.e. we consider it unlikely that MEE
would be able to refinance the Jarvis Debt on equivalent terms from any third party
financier.
• As it relates solely to a debt instrument, with no voting rights, the Jarvis Debt
Extension has no impact on the voting rights, ownership or control of MEE.
• We consider the fact that the Jarvis Trust is willing to continue to provide financial
accommodation to the Company is a positive signal in respect of its ongoing support
of MEE and its efforts in attempting to facilitate a sale of the King Honey business.
• In our opinion there are severe negative implications for the Company if the Jarvis
Debt Extension resolution is not approved. The Jarvis Debt itself would be repayable
on 30 June 2024 meaning the Company would have just over three months to secure
alternative financing arrangements. In addition, the amendments to the BNZ debt
would most likely not proceed in which case the MTL Associated Shareholders would
also most likely reconsider their commitment to invest $2.0 million of new capital. In
this scenario the board may have little alternative but to appoint voluntary
administrators and/or invite the BNZ (as the senior lender) to appoint receivers.
5.3 Evaluation of the fairness of the Transaction
In our opinion, after giving due regard to all of the relevant factors, when viewed as a
whole we consider that the terms and conditions of the Transaction are fair to the
Non-associated Shareholders.
The basis for our opinion is set out in detail in sections 4.3 to 4.14. In summary the key
factors leading to our opinion are:
• The rationale for the Transaction is solid.
• The terms and conditions of the Rights Issue and the Underwrite are reasonable, and
we do not consider, at least in the short term, that there are any viable alternatives to
the Underwrite.
• The Underwrite provides MEE with certainty that the Rights Issue will raise at least
$2.0 million which also gives the Company certainty that the Restructure and the
Jarvis Debt Extension will be able to be implemented.
• The Transaction will have a positive impact on MEE’s financial position and cement
the MTL Associated Shareholders as supportive cornerstone shareholders.
• The MTL Associated Shareholders level of voting rights may increase up to 82.8%,
however any increase above 44.3% (the level after the MTL Distribution), depends
solely on the level of participation of the Non-associated Shareholders.
• All eligible shareholders will be able to participate in the Rights Issue and the
oversubscription facility provides the ability for shareholders (subject to the potential
36
for scaling) to increase their percentage holding, however the Rights Issue is non-
renounceable.
• The single largest negative feature of the Transaction is the potential for the MTL
Associated Shareholders to acquire a controlling interest in MEE (i.e. in excess of
50% of the Voting Shares) at a discount to the prevailing market price, which itself is
substantially below historic share prices.
5.4 Voting for or against the Resolutions
Voting for or against the Resolutions is a matter for individual shareholders based on their
own views as to value and future market conditions, risk profile and other factors.
Shareholders will need to consider these consequences and consult their own professional
adviser if appropriate.
37
6 Profile of Me Today Limited
MEE was incorporated on 27 June 2007 as RLV No.3 Limited. It listed on NZX’s alternative
market on 29 October 2007 through the issue of 25.0 million Shares at $0.001 per Share.
The Company transferred to the NZX Main Board on 1 July 2019.
Since its incorporation MEE has changed its name several times:
• Orion Minerals Group Limited on 16 December 2008
• CSM Group Limited on 8 April 2016
• Me Today Limited on 31 March 2020
RLV No.3 Limited was established as a shell company for the purpose of a being a vehicle
for reverse takeover transactions. On 11 December 2008 RLV No.3 Limited acquired 100%
of the shares an iron ore mining company based in Chile (Minera Varry S.A).
In conjunction with this transaction, RLV No.3 Limited entered into a subscription agreement
with Fengli Group (Hong Kong) Co. Limited, whereby Fengli Group (Hong Kong) Co.,
Limited agreed to subscribe for up to 200 million Shares in RLV No.3 Limited at an issue
price of US$0.125 per Share and options to acquire 50 million Shares in RLV No.3 Limited.
Fengli Group (Hong Kong) Co., Limited ultimately acquired 178,977,273 Shares under the
agreement.
In its annual report for 2011 the board of directors announced its decision to cease the
Company’s investigation of iron ore mining operations in Chile. The Company’s strategy
changed to pursuing private equity investment in projects and companies with Chinese
market potential. One opportunity was considered in 2011 to purchase 100% of the Shares
in Taifor (Asia) Limited, however, this transaction did not proceed.
On 17 July 2013 shareholder approval was given to commence a new business operation in
Australia processing scrap metal for export sale to Chinese markets. On 30 May 2013 China
Scrap Metals Resources Pty Limited was incorporated in Australia as a wholly owned
subsidiary of the Company to undertake the new business operations.
On 10 May 2017 the Company’s announced that it had resolved to wind down the operations
of China Scrap Metals Resources Pty Limited following a review of the subsidiary’s
operations. The subsidiary was voluntarily liquidated on 6 January 2019.
Following the wind down of China Scrap Metals Resources Pty Limited the Company
reverted to being a listed shell seeking investment opportunities or reverse takeover
transactions.
On 8 November 2019 Fengli Group (Hong Kong) Co., Limited divested its shareholding in
the Company via an off-market placement to a number of wholesale investors.
On 11 December 2019 the Company announced that it had reached agreement to acquire
100% of The Good Brand Company Limited and Me Today Limited. Shareholders approved
the transaction on 30 March 2020 and the transaction was completed on 31 March 2020.
As part of the acquisition of The Good Brand Company Limited and Me Today Limited a
placement of 300 million Shares at $0.005 per Share (equivalent to $2.50 on a current, post
consolidation basis) to wholesale investors and completed a share consolidation of one
38
Share for every five Shares held. Following these transactions MEE had 364,909,997
Shares on issue.
In July 2020 MEE undertook a further capital raise, consisting of a retail offer and a share
purchase plan, which resulted in $4.5 million of new capital raised through the issue of
47,368,430 new Shares split as follows:
• retail offer: 42,105,263 Shares at $0.095 (equivalent to $9.50 on a current post
consolidation basis) per Share
• share purchase plan: 5,263,167 Shares at $0.095 per (equivalent to $9.50 on a
current post consolidation basis) Share
Following the July 2020 capital raises MEE had 412,728,428 Shares on issue.
On 31 May 2021 MEE announced that it had agreed to acquire 100% of King Honey Limited
from the Jarvis Trust. Shareholders approved the transaction on 25 June 2021 and the
transaction was completed on 30 June 2021. The total purchase price of $36.0 million was
satisfied by the payment of $21.0 million cash, $10.0 million of new Shares at $0.088 per
Share, resulting in the issue of 113.64 million Shares (on a current post consolidation basis
this represents 1.14 million shares being issued at $8.80 per Share) and a $5.0 million
subordinated note. The Company also undertook a capital raising by issuing 178,977,270
new Shares at $0.088 (equivalent to $8.80 on a current post consolidation basis) to a mix of
wholesale investors and a share purchase plan to retail investors.
In June 2022 MEE undertook a capital raise via a rights issue to existing shareholders of 1.3
new Shares for every Share held at a subscription price of $0.01 (equivalent to $1.00 on a
current post consolidation basis). The rights issue raised $7.5 million of $10.0 million sought,
with $0.75 million being raised through a shortfall purchase by MTL. The shares purchased
by MTL in the shortfall were contemporaneously reclassified into Non-voting Shares,
resulting in MTL owning 248.0 million Non-voting Shares (equivalent to 2,480,352 Non-
voting Shares on a current post consolidation basis).
On 9 January 2024 MEE completed a 100:1 Share consolidation, resulting in the number of
Shares decreasing to the current total of 15,437,639 (12,957,287 Voting Shares and
2,480,352 Non-voting Shares).
Further information on MEE can be found at:
• The Company’s own website: https://www.metoday.com/
• NZX’s website: https://www.nzx.com/companies/MEE
39
6.1 Nature of operations
MEE owns and operates a group of health and wellness companies, a summarised
organisation structure is displayed below
Within The Good Brand Company Limited the primary business segments are:
• Me Today
• The Good Brand Company
Within Me Today Mānuka Honey Limited the primary business segments are:
• King Honey.
6.1.1 Me Today
Me Today is a New Zealand health and wellness brand that produces premium quality
supplements and natural skincare products. Me Today products are formulated using highly
absorbable forms of ingredients and, where possible, are either vegetarian or vegan friendly.
The Me Today range offers a modern solution to modern problems.
Both the supplements and the natural skincare categories in NZ and overseas have
experienced significant growth in recent years. While the Me Today brand launched with
supplements and natural skincare as the platform, the Company sees opportunities to further
expand the product offering within the beauty and wellbeing space.
6.1.2 The Good Brand Company
TGBC was established to sell and market third party brands within the health and wellness
space. It represents Me Today and three other agency branded businesses (Lifespace,
Artemis and SleepDrops).
Me Today
Manuka Honey
Limited
Me Today
Limited
The Good Brand
Company
Limited
100%
100%
Three wholly owned subsidiaries
operating in the health and wellness
business
Several subsidiaries undertaking the
production, distribution, and sale of
mānuka honey
40
6.1.3 King Honey
King Honey is a premium Manuka Honey producer that operates a fully integrated Manuka
Honey business. King Honey has a network of bee hives and queen bee rearing hives
across the North Island of New Zealand.
King Honey operates two brands, the BEE+ brand and the Superlife brand (represented
through TGBC).
6.2 Directors and executives
MEE directors and executives
Name Role
Grant Baker Non-executive chairman
Michael Kerr Executive director (CEO)
Stephen Sinclair Executive director (CFO)
Hannah Barrett Independent director
Roger Gower Independent director
Antony Vriens Independent director
Richard Pearson Non-executive director
6.3 Capital structure and shareholders
As at 10 January 2024 MEE had 12,957,287 voting Shares on issue held by 794
shareholders.
The table below presents the names, number of Shares, and percentage of voting rights (i.e.
the table excludes MTL’s Non-voting Shares) held by the top ten shareholders as at 10
January 2024.
MEE top ten largest shareholders
Name Shares % of voting Shares
MTL Securities Limited
4,365,785 33.7%
TW Jarvis (No.1) Family Trust 1,392,045 10.7%
Forsyth Barr Custodians Limited 729,732 5.6%
ASB Nominees Limited 350,000 2.7%
James Patrick Keogh 242,890 1.9%
Sean Robert Joyce 169,259 1.3%
Ilakolako Investments Limited 109,273 0.8%
Wallflower Limited 89,334 0.7%
Antony Vriens 81,595 0.6%
Justin Matthew Bade 80,000 0.6%
Total top ten 7,609,913 58.7%
Others (784) 5,347,374 41.3%
Total 12,957,287 100.0%
Source: Company share register
MTL also owns 2,480,352 Non-voting Shares. As part of the Transaction shareholders will
vote on the reclassification of these Non-voting Shares into Voting Shares. Assuming this
41
resolution is passed MTL will, immediately prior to the Rights Issue, hold 44.3% of the voting
rights in MEE.
No other securities, or options to acquire securities, are on issue.
6.4 Strategic plan
MEE’s strategic plan is focused on realising cost savings across its business segments and
continuing to expand its brands globally and in New Zealand. Alongside this MEE is also
actively looking to sell the King Honey business.
New product development is a key part of MEE’s strategy, in particular MEE is seeking to
leverage its investment in King Honey to create Manuka Honey based products
4
. Products
under development over 2023 included:
• 3 UMF rated Me Today Manuka Honey products;
• 4 Me Today Manuka Honey Lozenges;
• 9 new Me Today supplements; and
• 4 Me Today Manuka Honey Active skincare products.
MEE’s strategic plan is expanded on in the Notice of Special Meeting.
6.5 Key issues and risks affecting the Company
The main factors and risks that MEE faces include:
• the Company’s ability to finance its activities;
• the ongoing loss-making nature of each of MEE’s underlying business segments;
• MEE’s ability to reduce its cost base;
• weakening sales demand from King Honey’s key customer in the Chinese market;
• King Honey is exposed to climatic risks that can impact on both the quantity, and
quality, of the annual honey harvest, and
• its ability to sell the King Honey business and the price received in any sale (and
whether there would be any surplus above the amount of BNZ and the Jarvis Trust
debt secured against King Honey).
6.6 Financial performance
A summary of MEE’s financial performance is presented below the following commentary:
• FY22 represented 15 months of trading following the change of MEE’s balance date
to 30 June. This change was primarily related to the acquisition of King Honey and
fitting in with the seasonal nature of that business.
4
We are unsure how, or if, these plans would be impacted by any sale of the King Honey business. We assume that ongoing
product development and distribution rights would be factors that MEE negotiates with any potential purchaser.
42
• Prior to FY22 MEE’s revenue consisted primarily of Me Today product sales and
agency revenue earned by the Good Brand Company. King Honey sales are
included in revenue from FY22.
• The large increase in revenue, gross profit, and expenses reflects the acquisition of
King Honey in 2021.
• Expenses consist of cost of sales, marketing, and salaries and wages. In FY23
Admin expenses were $4.4 million, Selling and Marketing expenses were $3.0
million, and Distribution expenses were $0.9 million.
• EBITDA by segment presents the operating earnings of each business within MEE.
The Head Office segment reflects the corporate, administration, and listing costs of
MEE.
• In line with accounting standards for businesses like MEE the bottom-line reported
results include fair value gains and losses on harvested honey and biological assets
(i.e. bees).
• The results also contain a number of one-off expenses:
- Reverse listing related expenses in FY20 of $4.2 million
- Restructuring, impairment, and asset write downs of $10.9 million in FY22
and $2.8 million in FY23.
Summary statement of financial performance – Me Today Limited
FYE 31 March 31 March 30 June 30 June
12 months 12 months 15 months 12 months
NZ$000’s, audited 2020 2021 2022 2023
Net Revenue 566 1,143 8,273 7,883
Gross profit 459 680 3,141 3,116
GP% 81.1% 59.5% 38.0% 39.5%
Total operation costs (1,255) (3,516) (8,787) (8,262)
EBITDA (796) (2,836) (5,646) (5,146)
EBIT (815) (2,927) (7,771) (6,677)
NPBT (814) (2,860) (8,399) (7,267)
One-off items and fair value movements (4,168) - (13,749) (5,776)
NPAT (4,982) (2,860) (19,544) (13,043)
Segment EBITDA
Me Today (515) (1,764) (1,913) (2,365)
The Good Brand Group (233) (91) (310) (161)
King Honey - - (1,881) (1,228)
Head Office (50) (982) (1,548) (1,392)
Source: MEE Annual Reports
43
6.7 Financial Position
A summary of MEE’s financial position is presented below the commentary.
Commentary:
• The balance sheet has grown primarily due to the acquisition of King Honey and
capital raised in FY21 and FY22.
• Net working capital primarily consists of inventory ($16.8 million as at 30 June 2022
and $14.8 million as at 30 June 2023), payables, and receivables.
• Non-current assets include right of use assets of $0.8 million, $1.4 million, and $0.2
million in FY23, FY22, and FY21, respectively.
• The Term Deposit in FY21 is not included in Net debt so as to match the Company’s
presentation (although the proceeds did effectively end up in Cash at 30 June 2022.
• Debt reflects a mix of bank debt ($7.03 million at 30 June 2022 and 2023) and the
subordinated note held by the Jarvis Trust ($5.2 million as at 30 June 2022 and $5.4
million as at 30 June 2023).
Summary statement of financial position – Me Today Limited
As at 31 March 31 March 30 June 30 June
NZ$000’s, audited 2020 2021 2022 2023
Current assets 599 1,375 18,725 17,373
Current liabilities (529) (629) (1,766) (1,777)
Net working capital 70 746 16,959 15,596
Non-current assets 23 267 6,238 3,821
Biological assets - - 1,598 752
Intangibles 62 73 7,525 4,091
Term Deposit - 3,804 - -
Total non-current assets 85 4,144 15,361 8,664
Total net operating assets 155 4,890 32,320 24,260
(Cash) / overdraft (4,168) (1,195) (5,370) (913)
Debt - - 12,234 12,434
Lease liabilities - 193 1,357 806
Net debt (4,168) (1,002) 8,221 12,327
Total shareholders’ funds 4,323 5,892 24,099 11,933
Total shareholders’ funds and net debt 155 4,890 32,320 24,260
Source: MEE Annual Reports
6.8 Cash flow
A summary of MEE’s cash flow is presented below.
44
Summary statement of cash flow – Me Today Limited
FYE 31 March 31 March 30 June 30 June
12 months 12 months 15 months 12 months
NZ$000’s, audited 2020 2021 2022 2023
Operating cash flows (1,064) (3,334) (11,726) (5,624)
Investing cash flows 1,494 (3,919) (17,459) 1,249
Financing cash flow 3,700 4,280 33,360 (82)
Net cash flow 4,130 (2,973) 4,175 (4,457)
Opening cash 38 4,168 1,195 5,370
Closing cash 4,168 1,195 5,370 913
Source: MEE Annual Reports
Commentary:
• Operating cash outflows for the four years to 30 June 2023 have been $21.6 million.
• $37.0 million of new equity has been raised over the four year period to fund
acquisitions and cash losses.
• $3.8 million was invested in term deposits in FY21 (in investing cash flows) with the
proceeds in investing cash flows in FY22.
• The purchase of King Honey in FY22 is represented by investing cash flows of $21.2
million.
45
6.9 Share price history
A summary of MEE’s daily closing Share price and volumes of Shares traded from 5 January
2021 to 8 February 2024 is presented below. Historic prices have been adjusted for the
100:1 consolidation in January 2024.
Trading in MEE’s Shares is relatively thin, which is likely a reflection of the fact that the top
ten shareholders collectively hold c.60% of the Company’s Shares and the low market
capitalisation of the Company. Trading volumes in the last 3-months were higher than usual.
In addition to the Share price and volume data, selected material announcements are
plotted. The table below provides detail on these points.
Date Announcement / event
31-May-21 MEE announces acquisition of King Honey
30-Jun-21 King Honey acquisition completed
23-Sep-21 Trading update released with considerably lower King Honey sales outlook for FY21
29-Nov-21
1HY22 results released. Operating net loss before tax of $2.8 million. Conditional $6
million share placement to Jarvis Trust and MTL. Richard Pearson appointed to Board
18-Mar-22
Special meeting Chairman’s address released. MEE announces that revenue for the
year to 30 March 2022 was likely to be below previous guidance in both the King Honey
and TGBC business
30-May-22
FY22 results released (12 months). Operating net loss before tax of $5.9 million. MEE
announces a $10 million rights issue.
4-Jul-22 Shortfall placement of $0.75 million to MTL
29-Aug-22 FY22 results (15 months) released. Net loss after tax of $19.5 million
7-Dec-22
2022 Annual Shareholder Meeting. Restructuring and cost reduction in King Honey
announced
23-May-23
Trading update released. Announcement of poor honey harvest, yield down 50% on
average and quality "down significantly"
29-Aug-23
FY23 results released. Net Loss after tax of $ 13.0 million. Further reduction in size of
beekeeping operations.
0
50
100
150
200
250
-
2.00
4.00
6.00
8.00
10.00
12.00
Monthly volume (000's)
Share price (NZ$)
MEE Share price and volume 5 Jan 2021 -8 Feb 2024
Monthly volume (RHS)Share price (LHS)
Source: S&P Capital IQ
46
An analysis of VWAP, volume traded, and liquidity (measured as volume traded as a
percentage of Shares outstanding) is presented below. Over the 12-month period shown
MEE’s shares have traded between $1.50 and $0.09 with a VWAP of $0.391.
Share Trading
Period Ending 8
Feb 2024
Low ($) High ($) VWAP ($) Volume
traded
Liquidity
(%)
Annualised
liquidity (%)
1-month 0.09 0.10 0.098 106,197 0.69% 8.25%
3-months 0.09 0.20 0.130 492,708 3.19% 12.77%
6-months 0.09 0.50 0.184 645,697 4.18% 8.37%
12-months 0.09 1.50 0.391 962,560 6.24% 6.24%
Source: S&P Capital IQ
47
7 Sources of information, reliance on information, disclaimer and indemnity
7.1 Sources of information
The statements and opinions expressed in this Report are based on the following primary
sources of information:
• FY20, FY21, FY22, and FY23 annual reports;
• MEE Share Register as at 10 January 2024;
• MEE Annual Meeting Results for the 2020 – 2023 years;
• NZX announcements;
• Companies Office filings; and,
• S&P Capital IQ.
During the course of preparing this Report, we have had correspondence and discussions
with and / or received information from the Board of MEE and its legal advisers.
The Board has confirmed that we have been provided, for the purpose of this Report, with all
information relevant to the Company and the Transaction that is known to them and that all
the information provided is true and accurate in all material aspects and is not misleading by
reason of omission or otherwise.
Including this confirmation, we have obtained all the information that we believe is necessary
for the purpose of preparing this Report.
In our opinion, the information to be provided by MEE to the Non-associated Shareholders is
sufficient for them to understand all relevant factors and to make an informed decision in
respect of the Transaction.
7.2 Reliance on information
In preparing this Report we have relied upon and assumed, without independent verification,
the accuracy and completeness of all information that was available from public sources and
all information that was furnished to us by MEE and its advisers.
We have evaluated that information through analysis, enquiry and examination for the
purposes of preparing this Report, but we have not verified the accuracy or completeness of
any such information or conducted an appraisal of any assets. We have not carried out any
form of due diligence or audit on the accounting or other records of MEE. We do not warrant
that our enquiries would reveal any matter which an audit, due diligence review or extensive
examination might disclose.
7.3 Disclaimer
We have prepared this Report with care and diligence and the statements in the Report are
given in good faith and in the belief, on reasonable grounds, that such statements are not
false or misleading. However, in no way do we guarantee or otherwise provide any warranty
or representation that any forecasts of future profits, cash flows or financial position of MEE
will be achieved. Forecasts are inherently uncertain. They are predictions of future events
that cannot be assured. They are based upon assumptions, many of which are beyond the
48
control of MEE and its directors and management. Actual results will vary from the forecasts
and these variations may be significantly more or less favourable.
We assume no responsibility arising in any way whatsoever for errors or omissions
(including responsibility to any person for negligence) for the preparation of this Report to the
extent that such errors or omissions result from our reasonable reliance on information
provided by others or assumptions disclosed in this Report or assumptions reasonably taken
as implicit, provided that this shall not absolve Armillary from liability arising from an opinion
expressed recklessly or in bad faith.
Our evaluation has been arrived at based on economic, exchange rate, market and other
conditions prevailing at the date of this Report. Such conditions may change significantly
over relatively short periods of time. We have no obligation or undertaking to advise any
person of any change in circumstances which comes to our attention after the date of this
Report or to review, revise or update the Report.
7.4 Indemnity
MEE has agreed that to the extent permitted by law, it will indemnify Armillary and its
directors and employees in respect of any liability suffered or incurred as a result of or in
connection with the preparation of this Report. This indemnity does not apply in respect of
any negligence, wilful misconduct or breach of law. MEE has also agreed to indemnify
Armillary and its directors, employees and consultants for time incurred and any costs in
relation to any inquiry or proceeding initiated by any person. Where Armillary or its directors,
employees and consultants are found liable for or guilty of negligence, wilful misconduct or
breach of law or term of reference, Armillary shall reimburse its fees for preparing this
Report.
49
8 Qualifications and expertise, independence, declarations and consents
8.1 Qualifications and expertise
Armillary is a specialist New Zealand based investment banking, funds management,
financial training and advisory firm. It provides a range of services including the preparation
of valuations, merger and acquisition advice, capital raising and due diligence. Its client base
includes a range of small to medium sized private and listed companies, iwi organisations
and government agencies.
The individuals responsible for preparing this Report are Geoff Davis (BCom, ACA), David
Wallace (BCom, Dip Bus Fin), and Jansson Ford (BCom, MFINC).
Geoff Davis has over 30 years of experience in investment markets with an emphasis on
corporate finance, equity capital markets and all aspects of M&A. Prior to joining Armillary,
Geoff has worked at TeamTalk (now named Vital), Active Equities, Brierley Investments and
National Mutual / AXA Funds Management. Geoff holds a Bachelor of Commerce degree
from the University of Auckland and is an ACA member of Chartered Accountants Australia
and New Zealand.
David Wallace is a founding director of Armillary and is active across the Investment
Banking, Funds Management and Advisory areas of the firm. He has a background in
investment banking, investment analysis and corporate treasury, with over 30 years’
experience working in capital markets in New Zealand. David holds a Bachelor of Commerce
degree from Canterbury University and a Post Graduate Diploma in Business Finance from
the Auckland University Graduate School of Business.
Jansson Ford is a Senior Analyst at Armillary and has been with the firm since July 2022. He
holds a Masters of Finance from the University of Otago and a Bachelor of Commerce
degree from the University of Otago.
8.2 Independence
Armillary does not have at the date of this report, and has not had, any shareholding in or
other relationship with MEE or MTL or any conflicts of interest that could affect its ability to
provide an unbiased opinion in relation to the Transaction.
Armillary will receive a fixed fee for the preparation of this Report. This fee is not contingent
on the conclusions of this Report or the outcome of the voting in respect of the Resolutions.
Armillary will receive no other benefit from the preparation of this Report. Armillary does not
have any conflict of interest that could affect its ability to provide an unbiased Report.
8.3 Declarations
This Report is dated 21 February 2024 and has been prepared by Armillary at the request of
the Company to fulfil the reporting requirements of the Takeovers Code and NZX Listing
Rules. This Report, nor any part of it, should not be reproduced or used for any other
purpose.
Armillary specifically disclaims any obligation or liability to any party whatsoever in the event
that the Report is supplied or applied for any purpose other than that for which it is intended.
Advance drafts of the Report were provided to the directors of MEE. Certain changes were
made to the Report as a result of the circulation of the drafts. However, there was no
50
material alteration to any part of the substance of this Report, including the methodology or
conclusions as a result of issuing the drafts.
Our terms of reference for this engagement did not contain any term that materially restricted
the scope of the Report.
8.4 Consents
Armillary consents to the issuing of this Report in the form and context in which it is to be
included with the MEE Notice of Meeting to be sent to MEE shareholders. Neither the whole
nor any part of this Report, nor any reference thereto may be included in any other
document without our prior written consent as to the form and context in which it appears.
Yours faithfully,
Geoff Davis David Wallace
Director Joint Managing Director
Armillary Limited Armillary Limited
---
22 February 2024
Me Today – Shareholders’ meeting
Me Today Limited (NZX:MEE) has released the notice of special meeting of Shareholders which will
be held at Events on Khyber, Level 2, 155 Khyber Pass Road, Grafton, Auckland 1023 on Friday 8
March 2024 commencing at 11am.
The purpose of the special meeting is to seek approval for a recapitalisation and restructuring of the
Me Today group. Me Today Limited is seeking approval from shareholders to raise up to $2.78m in
new capital supported by an underwrite of $2m from major shareholders Grant Baker and Stephen
Sinclair. Shareholders will also be asked to approve the variation and extension to the Jarvis Trust
Loan as communicated to the market on 20 December 2023.
Subject to approval from shareholders the new capital is being raised at 8 cents per share, the raise
will include a rights issue providing all shareholders the opportunity to participate in the raise.
Accompanying the notice of meeting is the Independent Adviser’s Report and Appraisal Report
commissioned by the independent directors in respect to the capital raise prepared by Armillary
Limited.
As explained in the notice of meeting the independent directors of Me Today Limited recommend
that shareholders vote in favour of the resolutions.
For further information, please contact.
Stephen Sinclair
Me Today Limited
021 330053
stephen@metoday.com
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.