Dive Brief:
- A class of Rubicon shareholders is seeking compensation of more than $330 million from Rubicon. Their attorneys cite an agreement mandating payment if ownership of the company changes hands. The compensation estimate is based on a 2023 filing that put Rubicon’s Series A stock price at $10.
- Specifically, they say payment should have been triggered by a transaction last year in which current board member Jose Miguel Enrich acquired a controlling stake in the company through affiliate MBI Holdings.
- In a response, Rubicon denied that it owes payment because MBI was part of the same shareholder class at issue. The agreement concerns a class of shareholders who were part of a tax receivable agreement, or TRA, from before Rubicon went public via a special purpose acquisition company in 2022.
Dive Insight:
The letter was sent as Rubicon has been further removing itself from the public markets. Rubicon’s tenure as a public company has been marked by a lower-than-expected intial public offering and repeated attempts to improve revenues and the company’s stock price. The New York Stock Exchange delisted the company in June after months of poor performance.
Board chairman Andres Chico and majority shareholder Enrich have been responsible for some of the financial changes at Rubicon. The two have provided repeated capital infusions to the company through affiliates, most notably Rodina Capital.
The company’s C-suite has also seen changes in recent months. Mike Dulin became CEO in January, and Eric Bauer became CFO in December. Both come to Rubicon from Circulus, a company acquired by Dow last year and previously backed by Ara Partners.
Rubicon recently notified the Securities and Exchange Commission it intended to cease financial reports and deregister a class of securities it had been selling. That change went into effect on Jan. 28, according to securities filings.
Those moves are typically associated with companies in the process of going private, according to a source familiar with the matter. Rubicon declined to comment on the filings.
Last year, Rubicon sold its fleet technology business to Rodina Capital, which then sold the assets to Routeware about two months later. Another affiliate of Enrich, MBI Holdings, also acquired enough shares of Rubicon to make Enrich the majority shareholder in May in a $20 million deal.
According to the letter sent to Rubicon, those transactions constituted a "change of control" of the company, triggering a payment to TRA holders.
Michael Heller, a former Rubicon employee who was most recently chief administrative officer, is representing the TRA holders as tax receivable administrator, per the letter sent to Rubicon. The class is composed of roughly 200 entities and individuals, according to a source familiar with the arrangement.
Rubicon denied that it owes payment in a letter sent to the lawyers representing the shareholders. In a response dated Jan. 31, an attorney representing Rubicon said the actions of MBI Holdings did not warrant an early termination payment because MBI was also a TRA holder.
The attorney said that Rodina Capital is willing to purchase shares held by other TRA holders, and added: “A sale of the TRA interests to Rodina provides the TRA Holders certain and compelling value for TRA interests that otherwise would not result in any payments in the near term, if at all.”
“To be clear, and as Rodina has stated consistently to your client and the other TRA Holders, Rodina has no intention of undertaking any transaction that would result in an Early Termination Payment,” the attorney noted.
The dispute could go to arbitration within weeks, where a panel of tax attorneys would determine what, if anything, is owed.
Cole Rosengren contributed additional reporting to this story.
