Apollo Capital Expresses Concerns Over Highwire Capital's Proposed Take-Private Of SPAR Group Due To Financing Uncertainty, Limited Obligations Of Highwire, Lack Of Disclosure On SPAR's Cash Balance, And Urges SPAR Board To Provide Full Disclosure And Reconsider Transaction Recommendation

Author: Benzinga Newsdesk | October 04, 2024 04:31pm

Apollo Technology Capital Corp. ("Apollo Capital" or "we"), today expressed its concerns about the proposed take-private of SPAR Group, Inc. (NASDAQ:SGRP) ("SPAR") by Highwire Capital ("Highwire"), a middle-market private equity firm focused on performing leveraged buy-outs, and discloses the intent of its Chairman and CEO, a stockholder of SPAR, to vote against the transaction at the upcoming special meeting of SPAR stockholders. 

Apollo Capital contends that, among other things: (1) there are serious questions about the credibility and certainty of Highwire's financing and the ability to close the proposed take-private transaction, (2) if Highwire cannot obtain the financing, it would only be obligated to pay to SPAR a fee of $1.76 million, and Apollo Capital believes that such an amount would not begin to compensate SPAR and its stockholders for the harm they would suffer as a result of a failed transaction following a prolonged strategic review process, and (3) the transaction is conditioned on the balance sheet cash of SPAR being not less than $14,200,000, and SPAR has not provided disclosure as to its current expectation of balance sheet cash at closing.

Following our review of the SEC disclosures by SPAR and Highwire, we question whether the proposed take-private transaction is nothing more than an option for Highwire to acquire SPAR at its sole discretion, and to the detriment of the SPAR stockholders.  We believe that the SPAR Board of Directors (the "SPAR Board") should immediately provide its stockholders with full and fair disclosure regarding the status and the terms of Highwire's proposed financing and SPAR's closing balance sheet cash expectations.  Without this critical information, SPAR stockholders cannot reasonably be expected to have a fully informed vote on the proposed take-private transaction.  

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