The ongoing saga of Baselworld and organisers the MCH Group continue, with the surprise announcement that Lupa Systems LLC, an investment firm founded by James Murdoch in 2019, has been in talks to take a 30-44% stake in the Group.
In a press release, the MCH Group stated that Lupa Systems LLC would become an “anchor shareholder”, with Murdoch getting a seat on the MCH Group’s board of directors. They also confirm previous statements that they are reassessing exhibition and event formats for the MCH Group events and fairs such as Baselworld and Art Basel.
At an Extraordinary General Meeting (EGM) on August 3, 2020, the Board of Directors will propose a number of measures to shareholders, including a restructuring of the group’s debt capital/ capital increase of CHF 104.5 million, and the entry of Lupa Systems LLC as a new shareholder. They have already signed a 15 year relationship agreement with a lock-up period of five years, committing to maintain the MCH Group’s headquarters in Basel and to continue operating events and exhibitions in Basel and Zurich.
As stated in the official press release, as part of the measures that will be presented as one package to the shareholders of MCH Group at the EGM, a capital increase will be proposed in two steps: Firstly, the conversion of a loan from the Canton of Basel-Stadt in the amount of CHF 30 million into equity. Secondly, a cash capital increase of CHF 74.5 million, in which all shareholders will be able to participate by exercising their subscription rights. Lupa Systems LLC has agreed to fully underwrite the subscription of the new shares and to purchase all shares not subscribed by shareholders.
The MCH Group also proposes that the public sector shareholders will waive the exercise of their subscription rights, and together will continue to hold more than 33.3% of the shares after the capital increase. Lupa Systems’ shareholding after the transaction will depend on how many subscription rights will be exercised by other shareholders and will range between 30 and 44%.
The issue price for the new shares has been set at CHF 10.50.
In addition to the capital increase, the Canton of Basel-Land and the Basler Kantonalbank will extend the repayment period of their CHF 35 million and CHF 40 million loans by five years. In order to refinance the CHF 100 million bond issue due in 2023 following the capital increase, a public bond exchange offer is also planned.
The Board of Directors will comprise of three representatives each from the public sector shareholders and Lupa Systems LLC, plus two or three independent members. The reduction of the Board of Directors to a maximum of nine members and its partial replacement will be completed by the 2021 Annual General Meeting.
At the EGM on 3 August 2020, the election of James R. Murdoch (Founder and CEO Lupa Systems), Jeff Palker (Managing Partner and General Counsel Lupa Systems), and Eleni Lionaki (Partner Lupa Systems) to the Board of Directors will be proposed. Dr. Tanja Soland and Dr. Karin Lenzlinger Diedenhofen will step down from the Board of Directors. Dr. Ulrich Vischer will serve as Chairman until the Annual General Meeting in 2021.
Furthermore, there will be a proposal to abolish the current restriction on the voting rights of the shareholders, which will enable all shareholders to exercise their full voting rights without any restrictions. Finally, an opting-up limited to Lupa Systems will be proposed, allowing it to purchase all shares for which no subscription rights have been exercised, without risking the obligation to make a public offer for the whole company.
The set of measures proposed to the shareholders of MCH Group, the loan maturity extensions and the relationship agreement, will only be implemented if all resolutions are approved by the shareholders.
Bernd Stadlwieser, CEO of MCH Group issued the following statement: “We started the year 2020 with liquid assets of around 140 million. Only in this year, the corona crisis will lead to a drop in sales of CHF 130 – 170 million and negative effects on the result in the mid double-digit million range. This comprehensive package of measures is needed to master this situation. And it is also needed for implementing our strategy, working on new business opportunities and strengthening our long-term competitive position.”
The next edition of Art Basel will take place from June 17-20, 2021. The cancelled Hong Kong Art Basel is planned for March 25-27, 2021, and Art Basel Miami Beach is still planned for 3-6 December this year.
The cancelled Baselworld 2020 will also be temporarily put on hold for 2021.
Events of up to 1,000 people have been allowed in Switzerland since June 22. A ban on events of more than 1,000 attendees remains until at least the end of August.