Out-of-pocket Bidstack investors vow to take action after execs buy Aim-listed firm out of administration

Bidstack was bought out of administration by its executive team last Friday [credit: Bidstack]

Angry investors in Aim-listed Bidstack are preparing regulatory complaints and plotting legal action after the company’s top brass bought the firm out of administration last week.

Bidstack, which sells in-game advertising to video game companies, announced last Friday that it was going into administration.

Shortly after, chief executive James Draper, who previously owned around three per cent of the company, announced in a LinkedIn post that executives had purchased the firm as part of a pre-pack administration deal.

“The acquisition is a pivotal moment for the next phase of growth for the business. Our technology is at the forefront of sports technology and I couldn’t be more excited,” Draper said. “I am proud that we are able to reward our ambitious and industry pioneering team and have them as shareholders alongside myself.”

Bidstack said in a notice to the stock market earlier this month that as many as 200 companies had been prospected by Alvarez & Marsal as part of efforts to save the firm.

However, the failure to find an investor and move to place the company into administration has left shareholders millions of pounds out-of-pocket and prompted threats of legal action from investors.

Graham Auger, a retail investor in Bidstack, said he invested in the company in early 2020 after the firm floated.

“It just sounded really exciting,” Auger told City A.M. “There was a massive buzz around the whole thing.”

But he said it started to become clear the company was “over promising and under delivering” and he felt that investors were increasingly being left in the dark about the company’s plans.

When asked how much he has lost, he replied: “It is tens of thousands of pounds… possibly upwards of £60,000 or £70,000.”

Auger, 49, who lives in Basildon, said the lack of transparency around the administration deal raises many questions.

“What’s happened to all that money? What’s happened to that investment?” he said.

“Who are these 200 plus investors that they approached to invest or buy assets in the company?” he added.

Jason Addison, another retail investor, told City A.M. he was furious after reading Draper’s statement confirming he and the other executives had acquired the firm.

“Not even a mention of any previous shareholder [or] thank yous for all the support that we’ve given and the money that we’ve provided. Nothing. Just completely thrown under the bus as though we never existed,” said Addison, 54, who lives in the East Midlands.

“Not even a mention of any previous shareholder [or] thank yous for all the support that we’ve given and the money that we’ve provided. Nothing. Just completely thrown under the bus as though we never existed.”

Jason Addison, a retail investor

Nick Hargrave, another investor in Bidstack, who last year coordinated an effort to oust two board members, told City A.M. it was “difficult to believe” there was no interest from over 200 buyers when “the management are expressing their pride in the acquisition stating the company’s ‘enormous potential’”.

“The directors have refused to provide updates to investors on positive business progress, actively block shareholders on social media and delete comments that they don’t like,” Hargrave alleged.

“They have not attempted to fulfil their fiduciary duty to promote the success of the company as a public entity, but have been organised and ruthless in trying to maintain the company’s reputation now that they own it,” he claimed.

Hargrave said he was now working with other investors on filing regulatory complaints as well as consulting about taking legal action against the firm. Efforts to take legal action are at an early stage, he explained.

Investors also fired a series of questions to Draper and chief strategy officer Lisa Hau yesterday over the rate of cash burn at the company after the firm received a EUR 3m settlement from a legal dispute with Azeroin in December.

The two firms had been locked in a dispute since January last year over what Bidstack said were unpaid sums.

“What happened to that court money from Azeroin, that three million? Where did that go?” Addison said.

Hugh Acland, 47, from Chichester, who invested around £130,000 in the company, said he had regarded the EUR 3m settlement as “good news”, which would have enabled the firm to get “into the second half of the financial year without bringing in extra money”.

“I was actually flabbergasted when they said a few weeks later that they’re running out of money,” he told City A.M.

Bidstack and Alvarez & Marsal were contacted for comment.

Write to Ben Lucas at ben.lucas@cityam.com and Charlie Conchie at charlie.conchie@cityam.com