MyMac sale goes to the vote

MyMac sale goes to the vote

Broad Investments calls for Apple reseller and distribution businesses to be offloaded

Broad Investments (ASX:BRO), owner of Apple reseller, MyMac, and Apple accessory distributor, Monstamac, is calling on shareholders to vote in favour of its plan to offload the businesses just 18 months after buying them.

The company completed a deal to acquire MyMac, Monstamac, and another business, Monstapos, in April, 2015, for a cash price of $200,000 plus an additional $145,000 in instalments.

Now, it wants to sell the businesses back to one of the original vendors, Steve Bardel, for $150,000.

The original sale of the businesses to Broad Investments saw Bardel become a director of the publicly-listed company.

In an ASX statement, the company said that, while the consideration for the sale of the businesses is $50,000 less than their acquisition cost, Broad Investments has received an additional $79,150 from MyMac since it was acquired. This figure represents a net marginal profit of $29,150 to the proposed sale, the company said.

“At the time [of the acquisition], the then directors expected the sale companies' businesses would add value for shareholders,” the company told shareholders. “MyMac is a high volume, low margin business that requires high levels of stock at all times for which its suppliers were unwilling to extend the required level of credit to sustain anticipated growth.

“The recent demise of Dick Smith and the closure of Next Byte stores, both of which were substantial Apple product resellers, led to more stringent scrutiny of retailers and their supplier credit facilities, resulting in a reduction in levels of stock and supplier terms,” it said.

Broad Investments told investors it “may not be readily able” to sell the businesses to a third party, “given the state of affairs, lack of sufficient supplier support, and current market sentiment toward such low margin operations”.

“The non-associated directors believe that while the sale companies may be profitable under a different or private structure, they are currently loss-making entities or are, at best, break-even or marginally profitable businesses, under their current structure of a public company,” the company stated.

The proposed sale comes after a dispute between Bardel and Broad Investments’ non-associated directors, which resulted in the commencement of NSW Supreme Court proceedings against the company.

According to Broad Investments, the dispute created a “dysfunctional board”.

The Supreme Court proceedings were since dismissed after discussions that resulted in the proposed sale of the businesses and the departure of Bardel from the board.

“The non-associated directors unanimously recommend that shareholders vote in favour of the proposed transaction,” the company said.

Shareholders will vote on the proposed sale of the businesses to Bardel Group at a special general meeting on 14 October.

At the time of writing, Broad Investments' share price stood at $0.002.

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