SurfStitch Group Ltd (ASX: SRF) ended its trading halt session state of November 08, 2016 with few key market updates released on November 10, 2016. The stock has been up 5.7% on said date. The key highlights of the market update include:
 
Rejection of proposal from Coastalwatch Pty Ltd: SRF’s Board of Directors has rejected the non-binding indicative and conditional proposal for 100% shares of the company from Coastalwatch Pty Ltd (CW). The main reason of rejection has been highlighted to be the fact that the proposal did not seem to be in the best interests of SRF or respective shareholders. Primarily, the proposal (entailing cash consideration of $0.20 per share) is said to have a modest amount above SRF’s recent VWAP without an appropriate premium for securing control. CW is noted to be a wholly owned subsidiary of Crown Financial.
 
Open letter from Crown Financial: Meanwhile, SRF had announced that Crown Financial Pty Ltd (engaged in litigation against entities in SRF with regard to a series of contracts) became a substantial holder of the company lately. The Crown Financial group has also sent out an open letter to SRF, which does not include any offer or revision to their earlier proposal. On the other hand, the letter includes some assertions and questions regarding SRF and aforementioned proposal. SRF claims some of these assertions to be speculative and would need substantive information on the same from the perspective of ongoing strategic review. At the same time, SRF does not intend to respond to the questions or address the assertions as of now.
 
It is prudent to note that on one hand CW aimed to come up with a proposal, and on the other hand Crown Financial continues to pursue legal actions against SRF. On a related note, SRF has informed that the group is co-operating with ASIC on the investigation of the company’s disclosures relating to aforesaid contested contracts with Crown Financial. The group is set to hold its AGM on November 16, 2016.

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