Stab buys itself back
"You only get one Alan Bond in your lifetime, and I've had mine," was how Kerry Packer mockingly described his profitable encounter with Alan Bond.
In 1987, Packer sold Channel Nine to Bondy for just over a billion dollars, and then three years later bought it back for $250 million when the WA businessman began to stumble.
Two years ago Sam McIntosh and Tom Bird sold Stab to SurfStitch for an inflated price and today they bought it back far cheaper. It's tempting to make the analogy to Packer though it's not entirely accurate.
In May 2015 SurfStitch bought Stab in a deal worth $2.26 million in cash and 2.4 million shares. The sale was just one acquisition of a bold digital media strategy - SurfStitch also bought Magic Seaweed, Garage Entertainment, and FCS. However, not long after the purchase the wheels came off and SurfStitch crashed spectacularly.
With such a dramatic fall it was only a matter of time before the recriminations began. At present SurfStitch are facing two class actions, plus five court cases relating to the failed strategy, and three weeks ago they called in voluntary administration to clean up the mess and restructure the company. All the assets were put on the table as SurfStitch fielded offers to raise cash.
And this, of course, is where Sam and Tom stroll in to buy back their own company for a song - or a "nominal cash consideration" as the press release states. Packer meet Bond, sort of...
You see, though they got $2.26 million in cash, the larger chunk of the Stab deal was stock of 2.4 million shares. At the time of the sale the shares were worth $1.50 - valuing them at $3.6 million - and at their peak they hit $2.13 - putting a cash value of $5.1 million on Stab's shares!
However, they were held in escrow, unable to be cashed out, and before they could SurfStitch's stock plumetted. First from the $2.13 peak down to around $0.20, where they foundered for a year before sliding further still. It's currently $0.06 which values Stab's shares at just $144,000.
So today's sale isn't quite as sweet as Kerry Packer's all those years ago. Nevertheless the duo have come out ahead, and perhaps more importantly they've regained ownership of their title they started back in 2004 (along with Derek Rielly who left before the SurfStitch acquisition).
Economists are trotting out doomsday prophecies for SurfStitch, but whatever happens it'll have no longer have any bearing on Stab.