SMI Vantage seeks to delist without exit offer, citing ‘difficult financial conditions’
Cash in hand is being used by the group to meet monthly operating expenses
SMI Vantage intends to hold an extraordinary general meeting (EGM) for minority shareholders to evaluate and vote on a resolution to delist the business without an exit offer.
The investment and management company, which offers cryptocurrency mining-as-a-service solutions to retail customers, was ordered to delist after the Singapore Exchange on Aug 1 rejected its request for a deadline extension to exit its watchlist.
Following the counter’s trading suspension on Sep 2, SMI Vantage was informed by its two controlling shareholders that they would not be making an exit offer for the company.
Both have also committed not to recall their shareholder loans amounting to some US$10.6 million as at end-June 2024.
One of its two controlling shareholders, Mark Bedingham, has nonetheless agreed to continue supporting the company financially as it works to reach agreements with its principal creditors.
Bedingham is president and chief executive of SMI Vantage.
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On Friday (Nov 1), the company said it will not be using its available cash to make an exit offer to its shareholders, as that sum is now being used by the group to meet its monthly operating expenses.
Among the “difficult financial conditions” listed by the company was that its net current-liability position stood at about US$937,000 as at end-June 2024. Around US$34,000 out of US$105,000 of the cash in hand at the company level is being held in Myanmar.
As at end-June, fixed assets stood at US$2.6 million, with trade receivables amounting to US$18 million. The company said the “gradual realising” of these trade receivables would be the “most reasonable route” to preserve the value of these non-current assets.
Cost-reduction moves
SMI Vantage noted that while earlier financing plans would have alleviated its net current-liability position, these were no longer available because such plans were contingent on the company remaining listed.
The group will also cancel its expansion initiatives, such as its proposed acquisitions of new digital mining assets, and a controlling interest in Whisky Cask Club.
“The company plans, and has already started to implement, restructuring steps to streamline its operations and lower costs across the various business units and the company itself,” said SMI Vantage.
It estimates central overheads to be reduced to US$400,000 from US$2 million annually as a result – and highlighted that some of its existing business operations “have not been directly affected” by the delisting notice. One such example is the group’s consumer-facing business in Myanmar.
However, SMI Vantage noted that travel retail sales at Yangon International Airport remained at 60 to 70 per cent below pre-Covid levels; it attributed this to reduced business travel and lack of tourism amid Myanmar’s political uncertainty.
Its cryptocurrency business has been operating at a “virtual breakeven cash-flow position, owing to Bitcoin currently trading below industry forecasts”.
The group said it is keeping a close watch on the operating conditions of its robochef business, and “stands ready” to close down this venture, if necessary, to “stem its financial strain on the company”.
In March 2024, SMI Vantage completed its acquisition of a 51 per cent stake in Provino Logistics, a Singapore-based importer of wine, beer and spirits.
The group said it recently entered discussions with Provino’s former major shareholder – who remains a significant shareholder and the company’s operating manager – to reverse the acquisition.
“Earlier plans to assist Provino to expand are also no longer achievable due to the current shortage of new funding,” added the group.
In “best interests”
Given financial support from Bedingham and the company’s “cautious approach to operations”, SMI Vantage expects to be able to continue running its traditional operations.
But it maintains that it was “not possible or practical to realise the company’s key assets in a significant manner to raise cash for an exit offer”. The group also stressed that it was highly unlikely that significant amounts of money could be remitted from Myanmar, given the country’s current political climate.
SMI Vantage’s board of directors therefore concluded that delisting without an exit offer would be in the best interests of the company and its minority shareholders, relative to other exit options.
The move would also enable the company to share its thoughts on this matter, and give minority shareholders the floor to ask questions and make their views known, it said.
SMI Vantage’s two controlling shareholders, including Bedingham, will not vote on the resolution to delist without an exit offer at the upcoming EGM.
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