Federal Treasurer Josh Frydenberg has put the brakes on GetSwift’s plans to redomicile in North America by blocking the last mile logistics provider’s plans to exit the ASX while a class action and a regulatory legal battle works its way through the courts.
Getswift shares have plunged since it announced plans in September to list with an obscure Canadian stock exchange, Neo. At the time Getswift said the move reflects the tremendous business opportunity in North America as well as the fact that its senior management and significant investors are based there.
“Without prejudging the outcome of Australian legal proceedings currently on foot, it is my preliminary view that the proposed acquisition would be contrary to the national interest at this time due to there being ongoing legal matters concerning the target (Getswift) which are yet to be resolved,” Mr Frydenberg wrote in a letter to Getswift dated Friday, November 20.
“If the proposed acquisition and subsequent redomicile of (GetSwift) were to take place before the current proceedings are resolved, this may have a negative impact on the interests of possible contingent creditors associated with those proceedings,” the Treasurer wrote.
GetSwift’s board said they received the letter late on Monday and emphasised it was a “preliminary view and not a final decision”.
“Getswift’s directors continue to believe that the proposed scheme is in the best interests of Getswift, and Getswift intends to continue to argue this at the second court hearing and in further submissions to the Treasurer,” it said.
Getswift has shed more than half its market value prior to Tuesday’s announcement. It plunged a further 10 per cent after the announcement to a low of 27¢.
The scheme of arrangement court hearing is still proceeding this Thursday in the Federal Court. That hearing “will hear further evidence and submissions regarding matters referred to in the Treasurer’s letter and highly relevant to GetSwift’s response to the Treasurer’s letter”, the company said.
Getswift receives small payments from customers such as Red Rooster in Australia and Pizza Hut operations in the Middle East for determining the best delivery route to get from their stores to customers’ homes.
The company is currently the subject of class action and an Australian Securities and Investments Commission (ASIC) action. The founders, former AFL footballer Joel Macdonald and Bane Hunter, face corporate bans in Australia if the ASIC action is successful.
The class action run by Phi Finney McDonald received court orders in September addressing concerns about the amount of Getswift cash finding its way overseas as well as the recent plans to relocate to Canada.
The judge ordered that Getswift provide three business days notice before implementing any decision regarding the acquisition of an interest in a third party company, or an asset worth more than $1 million, or transfer any assets to a related body corporate.
“GetSwift’s decision to redomicile to North America wasn’t arbitrary; quite the opposite, the company recognised a tremendous, unmet need for last-mile logistics in the largest SaaS (software as a service) market in the world,” Getswift’s chief operating officer Robert Bardunias said in September.
GetSwift shares were trading as high as $4 in late 2017 before it revealed in early 2018 that fewer than half the contracts it had been publicising were actually generating any revenue. Shares have not traded above $1 since then.
Source: Thanks smh.com