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Miton management buyout rejected

Miton Optimal’s management team made an offer for the business which has been vetoed by Midas Capital, its parent company.

Martin Gray, Nick Greenwood, Sam Liddle and Scott Campbell made a joint bid for subsidiary Miton, putting £4.5m on the table. The business has about £450m in assets under management across its range, which includes four British-domiciled retail funds.

Fund Strategy understands Midas wants £12m for the firm it acquired with iimia Wealth Management in 2008 in a deal that saw Midas take on almost £30m of debt.

Since the merger Midas has suffered from underperforming funds and subsequent redemptions, total­ling £100m in the first quarter of this year.

Earlier this month Midas Capital’s board proposed an agreement with the Bank of Scotland, its lender, to swap £36.5m of the company’s debt for a 20% equity stake, £14m of preference shares and a £12m senior debt facility.

This offer would see the Bank of Scotland pay 73p per share for Midas, a premium on stock trading at 21p on April 9.
The proposal will not be approved until it goes to a shareholder vote at an extraordinary general meeting yet to be set.

The four core members of Miton’s management team intend to challenge the plans to give the bank a 20% stake in the group. It is possible the company will go into administration if the debt for equity swap does not go ahead. If this happens, the Miton management will try to buy out the business from the administrator, according to a source close to the firm.

Colin Rutherford, the chairman of Midas, told Fund Strategy the group had explored all possible options during crisis talks.

However, he says a formal bid has not been made. “There has been no formal offer for a management buyout of the Miton part of the business,” he says, emphasing his intention to build the firm following the proposed restructure.

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