When you have more cash on your books than the company is worth, as Clearview Wealth does, then something needs to be done – hence the ’strategic review’ announced on Friday by the company.
At Thursday’s close of 54 cents, the company had a market value of $361.4 million.
Friday’s release from the company said it had a “Strong balance sheet and capital base backed by net cash and investments of $374m as at 30 June 2021 (equates to 56 cents per share),”
Obviously investors do not agree – the shares’ most recent high came earlier this year at 57.9 cents and the all-time high was $1.60 a share back in early 2018 which was before a flood of terrible disclosures about the company’s selling tactics in the banking royal commission.
Clearview announced the review on Friday, saying that it was supported by its 60% shareholder – private equity group Crescent Capital.
Crescent has been effectively trapped in the stock with no exit because no one seems to be interested in buying.
The announcement of a strategic review is tantamount to Crescent putting the $360 million group on the block.
It comes just weeks after Clearview sold its financial advice business to Centrepoint Alliance for around $15 million worth of stock (a 25% stake) and $3.2 million in cash.
“Following an evaluation of the company’s future capital structure and discussions with Clearview’s largest shareholder, Crescent Capital Partners, the Clearview Board has commenced a strategic review process,” Friday’s statement said.
“Its objective is to maximise Clearview shareholder value, determine the optimal future direction of the Company to protect and enhance customer and policyholder outcomes, and achieve a long-term shareholding base.
“This review will assess Clearview’s strategic options to unlock and enhance value for Clearview shareholders, including potential change of control transactions,” it says.
The Clearview board said there is no guarantee a deal will result but points out it has the support of Crescent.
Crescent bid for Clearview in 2012 at 55 cents a share, which after 8 years is where the shares currently area.
Crescent has been looking for an exit since then but can’t find a bidder game enough.
The banking royal commission battering found the group to have committed 300,000 criminal breaches of anti-hawking laws selling life insurance to poor people using aggressive cold-calling tactics.