Embattled FX risk management company Argentex has provided an update to its discussions with IFX Payments regarding a possible acquisition offer, after Argentex earlier this week announced that it had seen a deterioration in its near term liquidity position due to significant volatility in Forex rates.

IFX Payments offer for Argentex

The Board of Argentex Group plc (LON:AGFX) confirmed that it is in advanced discussions with IFX Payments regarding a possible offer to acquire the entire issued and to be issued share capital of the Company, at a price of 2.49 pence per Argentex share, to be paid in cash.

Argentex shares last traded (at the end of last week) at 42.68 pence, meaning that IFX Payments’ offer is at a whopping 94% discount. Argentex shares have traded in a range of 26.00-49.70 pence over the past 12 months. The 2.49 pence-per-share offer equates to a market value of just £3.1 million for Argentex, versus a current market value of £52 million.

Although discussions are at an advanced stage, the Argentex Board cautions that there can be no certainty that a firm offer will be made for the Company.

The Board of Argentex said that it has carefully evaluated the Possible Offer with its financial adviser, alongside other expressions of interest received, and has concluded that the Possible Offer reflects the most attractive immediate proposal for Argentex Shareholders. As such, should a firm offer pursuant to Rule 2.7 of the Code be made by IFX (UK) Ltd on the financial terms set out above, the Board of Argentex would be minded to recommend such an offer to shareholders. In the meantime, Argentex shareholders are advised to take no action.

Bridge Funding

In addition to the Possible Offer and in order to provide the necessary short-term financing for the Company, the Board has entered into an agreement with IFX Payments for a secured bridging loan of £6.5 million with an interest rate of 15% per annum, and the Company is now in receipt of cleared funds. The Company is in discussions with IFX Payments regarding significant further short-term ongoing liquidity support, which is crucial for the Company to continue to trade in the near term. The purpose of the Bridging Loan is to provide the Company with immediate working capital flexibility to assist with its near-term liquidity needs. The Company has kept its Liquidity Providers fully informed of its financial position and will continue to do so.

Notwithstanding the provision of the Bridging Loan, in light of the requirement for the Company to secure significant further immediate ongoing liquidity support within the next week, trading in the Company’s Ordinary Shares will remain suspended. Further announcements will be made in due course.

Irrevocable Undertakings in Connection with the Possible Offer

IFX Payments has received irrevocable undertakings from the Argentex directors and certain other Argentex shareholders to vote, or procure a vote, in favour of a firm offer at a price consistent with the Possible Offer in respect of a total of 70,161,376 Argentex shares representing, in aggregate, approximately 58.26% of the issued ordinary share capital of Argentex. The irrevocable undertakings remain binding in the event of a competing offer.

We will continue to follow this story as it unfolds.