MariaDB plc: In Default, Highly Speculative, 3 Bidders

This is highly speculative, but I wanted to bring the discussion out of the comment sections of my BFIN post as I found the situation interesting enough to initiate a small position.

MariaDB plc (MRDB) ($32MM market cap) offers enterprise and premium functionality on top of the open sourced (free) MariaDB Community Server database management system ("DBMS").  To distinguish between the company and the open sourced DBMS, I'll refer to the for-profit company itself as MRDB and the DBMS as MariaDB.  The lead developer of MariaDB is Michael "Monty" Widenius who was one of the original developers of MySQL, which was sold to Sun Microsystems, Widenius developed MariaDB in response to concerns following Oracle's acquisition of Sun Microsystems in 2009.  Widenius owns less than 1% of MRDB and is no longer a director/employee of the company itself.

MRDB was a 2022 deSPAC, it announced the definitive agreement with Angel Pond Holdings (POND) on 2/1/22, valuing MRDB at a headline $672MM or a lofty 14x revenue.  Between deal announcement and closing, the market's appetite for risky SPACs changed, upon closing in December 2022, the trust delivered minimal cash to MRDB as over 99% of POND holders redeemed.  Unsurprisingly, cash flow negative MRDB quickly ran into trouble and as of this January, MRDB was in default of their $26.5 promissory note to RP Ventures.  RP Ventures put restrictive covenants in their loan documentation that prevents MRDB from doing almost any major corporation action, including a change of control, without their consent.  Fortunately, MRDB does have several bidders circling looking to acquire the company in whole for cash:

Here are the players, shares trade for $0.45/share today:

1. Runa Capital (a related party to RP Ventures, also a 7.8% stockholder) made an offer for $0.56/share, later withdrew the offer and provided debt financing instead
2. K1 Investment Management (PE firm, SaaS focused) made an offer for $0.55/share
3. Progress Software Corp (PRGS, $2+B market cap) made an offer for $0.60/share

Basic timeline thus far:

• 9/14/23: Runa made an offer for $0.56/share after concerns management was pursuing a dilutive equity raise.  "Given the substantial and consistent losses the Company has incurred and its subscale level of revenue, Runa believes that the Company is highly challenged as a public company. The Company has expressed substantial doubt about its ability to continue as a going concern and Runa believes that the Company will continue to face severe challenges as a public company. Runa believes that the terms of its possible offer would deliver significant value for the Company’s shareholders."
• 10/10/23: Runa withdraws the $0.56/offer but enters into a $26.5MM promissory note with a January 2024 maturity date to refinance MRDB's term loan, this is the note that is currently in default.
• 2/15/24: K1 Investment Management makes an unsolicited non-binding indicative proposal for $0.55/share in cash.
• 2/19/24: Runa teams up with Monty Widenius, Widenius pledges his support for the Runa group and will cease his involvement with MRDB if Runa is not involved in any takeover or other change of control. "In the event there is a Qualifying Transaction involving MRDB and a party other than the Partners that does not include material participation of the Partners and Open Ocean in the equity and governance of MRDB, Mr. Widenius will immediately cease his support and involvement with MRDB."
• 3/12/24: CEO Paul O'Brien's employment agreement was not renewed and he resigned from the board.
• 3/13/24: K1 reiterated its offer. "In fact, our Possible Offer is more attractive to stakeholders in the face of a mounting financial crisis at the Company precipitated by the Company's lender. We have provided a clear way to create value and help MariaDB reach its full potential, and we intend to continue to pursue a transaction that accomplishes just that."
• 3/18/24: MRDB appoints a Chief Restructuring Officer from FTI Consulting.
• 3/21/24: The Runa group amends their 13D stating they oppose the K1 transaction. 
• 3/26/24: Progress Software (PRGS) offers $0.60/share.

The entry of Progress Software as a late bidder somewhat validates that there is value here, but RP Ventures/Runa continue to be hostile to this process, potentially trying to force the company into bankruptcy where as the senior lender they'd be there to pick up the pieces on the cheap.  This is a situation similar to Armstrong Flooring (AFI) from a couple years back where the company's lender gave it a few months to find a deal, there appeared to be equity value (to me at least), but ultimately AFI was zeroed out in bankruptcy.  The appointment of a CRO flags to me that MRDB could face a similar fate.  Either way, due to Irish takeover rules (MariaDB is Ireland domiciled), we should find out soon.

Disclosure: I own shares of MRDB