Totm share issuance to complete InterBIO acquisition approved
As many people made New Year’s plans last month, executives at some biometric identity firms rushed to move stock plays ahead. Some of the issuances are pro forma but at least one other indicates possible trouble.
Among them were TOTM, International Biometrics, Precise Biometrics, Idex and Fingerprint Cards.
On the perfunctory side, TOTM, a Singaporean maker of ID management and biometric products, announced that it has received the go-ahead to list up to 470,470,000 new shares that will be used to compensate parties involved in its buyout of International Biometrics.
InterBIO, as the company is known, is an investment holding company that controls a government contractor, PT International Biometrics Indonesia. PT licenses face, finger and iris biometrics software from Tech5.
The buyout, announced in October, was assigned an aggregate value of $46 million, or 14 cents per share. About a half-billion consideration and introducer shares are to be issued as a financing tool to close the deal. The Singapore Exchange’s sign-off means the shares can be listed.
Consideration shares can be used as sweeteners, helping to get a deal signed without committing additional money. A Hong Kong company called Precious Glory Enterprises was promised 28,228,200 new shares as a finder’s reward, helping to get the two parties in a room to negotiate an acquisition.
Publicly owned Precise, meanwhile, has increased its number of shares and votes to backup an employee incentive program.
One million series C shares, all owned by the company, were created to hedge the cost of a long-term incentive plan designed to boost performance from 2022 to 2028.
In October, Precise implemented a rights issue of 2.8 million ordinary and 3.9 million ordinary shares, increasing shares and voted by 6.8 million for a total of 46.4 million.
Rights issues can be a sign of trouble. They give current shareholders the right to buy discounted shares but do not obligate them to do so. The move typically is a way to buy cash that is too expensive to raise other ways.
It is an incentive for current investors to put more money into a company, which sounds good, but the object of an equities market is to let money flow more freely to growth opportunities based on market conditions of the moment, not incentives. And, by definition, increasing share numbers reduces their value.
Publicly held Fingerprint Cards, in fact, has reported that its SEK305 million ($29 million) rights share issue announced in October, increased its series B shares by 14.9 million. Votes grew by the same amount.
As of December 30, Fingerprint Cards reported its B shares totaled 416.6 million with the same number of votes.
Together, A- and B-series shares and votes were 424.4 million and 495.3 million, respectively.
Private placements are a form of debt. Shares are created expressly for sale to specific buyers. At the end of a contracted period, the buyer – a de facto lender – typically gets repaid the principal and interest.