Enad Global 7 Investor Proposes Selling The Company To Rake In More Cash
Enad Global 7’s financial report for the first quarter of 2023 came out last week, showing record-setting performance for the company thanks to Daybreak and Piranha Games, as well as My Singing Monsters generating a boatload of cash.
The good news is short-lived though as one of the company’s investors is apparently furious that EG7’s success isn’t generating enough publicity and raking in more cash to pad their wallets. The said investor, Alta Fox Opportunities Fund, has now petitioned the company’s board to sell it for parts in order to make them more money.
Alta Fox blames EG7’s undervaluation and limited international reach on the company’s previous leaders who were ousted by Daybreak’s Jason Epstein and Ji Ham shortly after their acquisition. Epstein and Ham now serve as EG7’s chairman and acting CEO, respectively. Alta Fox commended both for their efforts to revitalize the company, their personal investments, and their decision to dump Russian-owned Innova Games to bolster EG7’s financial position.
However, instead of a private communication to EG7's board of directors, Alta Fox has chosen to publicly release a press statement urging the board to explore “strategic alternatives” to boost the company’s near-term upside by more than 100%, including selling it entirely.
“[…] It is obvious to us that EG7 is a high-quality business that remains dramatically undervalued due to no fault of current leadership,” said Alta Fox. “The market’s recent muted reaction to strong Q1 results only reinforces our view.”
“It is our view that the Board must act expeditiously to address the Company’s significant trading discount so that long-suffering EG7 shareholders can prosper,” the investment group added. “That is why we encourage the Board to initiate a review of strategic alternatives to close the gap between the Company’s market value and intrinsic value, among other steps in the near-term.”
Alta Fox not only suggests the sale of the entire company to generate immediate profits for shareholders but also proposes implementing a recurring dividend, offering a 10% dividend directly to shareholders based on share prices. Additionally, the investment group recommends relisting the stock on a US-based exchange instead of the Swedish exchange. This move, however, raises concerns as it could potentially reduce consumer protections for shareholders and enable exploitative stock buybacks.
The current situation highlights the stark contrast from the days of Columbus Nova, where the hope now lies in Swedish investors standing up to Alta Fox's propositions. Additionally, there is a call for Epstein and Ham to act in the best interest of the games and their communities rather than succumbing to short-term financial gains.
