Even worse, Nomura is the bank that L Catterton has used to represent it in recent transactions.
Indeed, Nomura advised L Catterton on selling Elemis to LOccitane, and then also advised them when they sold OneSpaWorld to the Haymaker Special Purpose Acquisition Company in 2019!
We have serious concerns that Nomura was both ill-suited and too conflicted to advise the special committee in its
evaluation of the contemplated transaction and potential superior alternatives. By relying on a placement agent and financial adviser with pre-existing ties to L Catterton, the thoroughness of the
special committees exploration of alternative financing sources and its negotiation of the contemplated transaction is certainly questionable.
OSW Does not Need to Do this Deal, Under These Terms, at This Time
The current state of OSW is not so dire that the
contemplated transaction should proceed at the expense of unaffiliated shareholders. The Company has already taken actions to shore up its financial condition. On March 24, OSW announced, for example, that it had closed all of its cruise ship
spa facilities, all destination-based resort spas in the United States and the Caribbean, and a majority of destination-based resort spas in Asia. OSW further commenced efforts to repatriate or furlough its cruise or resort spa employees.
In announcing these and other actions on March 24, Leonard Fluxman, the executive chairman of OSW, stated that With these actions, we believe we
remain well positioned as business conditions stabilize buoyed by our strong leadership position, highly-efficient business model and global operating platform. Then, on March 30 OSW filed its Form
10-K which did not include any going concern language, indicating that OSW had likely demonstrated to its auditors the ability to meet its liabilities for at least one year.
Based on the disclosures it made in conjunction with the deal announcement, it appears that OSW has at least three months (and probably more) liquidity
available today. It is hard to believe that OSWs position is so dire that OSW had no time to find an alternative proposal that is both superior to the contemplated transaction and would be in the best interests of all shareholders.
OSW Leadership and Insiders Have Gone to Great Lengths to Protect Themselves at Expense of Shareholders
This available liquidity means this deal does not
have to be rushed through on an emergency basis. If there were a bona fide emergency, one might have expected OSW management and the members of the Board to create the cheapest liquidity of all by announcing voluntary (and temporary) pay reductions,
as executives and directors at countless other companies impacted by COVID-19 have done. In fact, despite eliminating the dividend and furloughing thousands of workers, management and the OSW Board continue to
be paid in full, as far as we know.
L Catterton (through Steiner Leisure) and Haymaker also took this opportunity to adjust the Deferred Shares
Trigger Event in the original Business Combination Agreement dated as of November 1, 2018 (as amended, supplemented, or otherwise modified, the BCA). Under the BCA, Steiner Leisure and Haymaker agreed to receive a combined
6.6 million shares on the earlier of, among other dates, the first day when OSW shares saw a 5-Day VWAP which was equal to greater than $20.00 or 10 years following the
company going public.
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