Automotive jumps at $3.5m loan from AMA as takeover looks likely
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Takeover target Automotive Solutions Group has borrowed $3.5 million from the predator trying to swallow it up.
4WD mechanic Automotive (ASX:4WD) told investors on Friday that car smash repairer AMA had loaned it the money to cover a $2.5 million tax debt.
Automotive didn’t have the cash to pay and weren’t allowed to pay out of a bank loan facility.
It had $1.2 million in free cash at the end of the September quarter, with planned spending of $8.4 million. It took in $7.8 million in receipts.
Automotive’s share price has languished since April when it fell by two-thirds after a profit downgrade.
AMA launched its take over bid for Automotive citing “directors who are not united, with two warring factions fighting for control”.
Automotive has since replaced its board and has been urging shareholders not to accept the AMA bid, calling it opportunistic.
But that may now be a moot point.
AMA announced on Friday it now owns 60.1 per cent of Automotive — more than the minimum acceptance barrier of 50.1 per cent.
The only other defeating conditions include Automotive making a material transaction above $200,000; altering its share register by issuing or consolidating stock; or material changes of control in the business.
The two sides had both requested separate extraordinary general meetings on the same day but these have been retracted.
AMA now claims to be a shareholder “concerned at this series of extraordinary events” and warns there’s no guarantee the directors won’t return.
“Further, [Automotive] is now in the hands of an entirely new board with no prior experience or involvement.”
Automotive has been contacted for comment.