July 24, 2018 could be remembered for a long time as a pivotal day in the history of Beasley Broadcast Group, with respect to its publicly traded stock.
A steep slide in the company’s share value entered its second straight day, as investors turned their anger into share sales over the announcement that the Bordes family would be selling 3,126,147 shares of their Class A common stock at $7.50 per share.
That price was far lower than where Beasley shares sat on Friday, July 20. Today, it’s roughly $1 a share higher than where BBGI currently trades. CEO Caroline Beasley had a few words about this during her company’s Q2 2018 earnings call for investors, debt holders and financial analysts.
Ms. Beasley addressed the sale of Bordes’ shares halfway through Beasley Broadcast Group’s Q2 2018 earnings call, which did not take live questions from debt holders, financial analysts or investors in lieu of emailed questions both she and CFO Marie Tedesco answered at the end of the 15-minute event.
Speaking with emotion in her voice, Ms. Beasley explained, “Neither the company or any Beasley insider including Peter Bordes Jr. sold any shares in the offering.”
She did not address Beasley’s attempt to “tag on” to the Bordes family share sale. On July 23, Beasley announced a proposed offering of shares of its Class A common stock — and placed this news ahead of the Bordes’ share sale in its announcement.
The proposed offering included 1,305,000 shares offered by Beasley, in addition to the 3.13 million shares offered by selling stockholders, or “certain stockholders of Beasley.”
It wasn’t widely known until the next day that these “certain stockholders” were Bordes family members, as Beasley simply referred to those “named in the preliminary prospectus supplement” it submitted with the SEC.
Additionally, the original plan allowed underwriters to have a 30-day option to purchase up to an additional 663,922 shares of Class A common stock from Beasley “and the selling stockholders” — again, the Bordes family.
This original plan sparked a selling frenzy. Then, on July 24, Beasley reversed course: it withdrew its plans to offer any shares.
Why did Beasley do an about-face on the share offering just 24 hours after presenting its proposal to the public? A company spokesperson told RBR+TVBR on July 24 that Beasley’s intent from the start was to “tag on” to Bordes’ share sale, noting that it was Beasley’s option based on whether or not enough demand existed for their offering.
Based on the $7.50 pricing of Bordes’ shares, Beasley opted out of selling their 1.3 million shares. By July 25, BBGI had fallen to a closing price of $7.30.
Aside from an August 2 gain, Beasley shares have fallen in every trading session since the announcement of a share sale, and then its scrub due to the low valuation of the Bordes family transaction.
Asked for comment about the steep drop in Beasley’s stock price on July 24, the Beasley spokesperson noted that “price activity is not unusual in secondary public offerings.”
During Beasley’s Q2 earnings call, Caroline Beasley spoke publicly for the first time on the slide in BBGI’s value. “While we are not happy with share price action related to the share, we expect long-term share liquidity,” she said, noting that a roadshow with investors focused on the company’s growth and strategic plan will likely lead to a rebound in its stock price. “Nothing has changed in our strategic objective for our company,” she said.
But, why did the Bordes family sell their shares now? This was not addressed in the call by Ms. Beasley. Asked this question on July 24, the Beasley spokesperson would only note that the sale of the Bordes family shares enables Beasley to get more liquidity in the market.
NASCENT DIGITAL GROWTH, AUTO UP
What else was stated on the conference call? CFO Tedesco noted that Beasley’s No. 2 advertising category, retail, was down in the low-to-mid single-digit range while its No. 3 ad category, automotive, was up in the low single-digit range compared to Q1 2018. She did not offer year-over-year comparisons.
An emailed question to Ms. Beasley and Tedesco asked about Q3 and Q4 political growth. Some $500,000 in political ads have been booked to date in 2018, and there are more bookings for August than what Beasley ended up with in July, thanks to the location of some of the company’s station groups as being “politically attractive.”
Some $2.5 million in political revenue is expected, Tedesco noted.
Lastly, Ms. Beasley took a question about Q2 digital revenue. Some 6.5% of the company’s revenue came from digital in Q2, representing a 19% quarter-over-quarter increase and accounting for $4 million in revenue.
“Clearly this is not anywhere near our long-term digital goals,” she said, adding that stations in PPM markets are making tech advancement designed to increase digital revenue.