- There’s a rare event on the JSE – the issuance of a pre-listing statement! This is the document that a company releases before coming to market. CA Sales Holdings is being unbundled from PSG and is moving its listing from the Cape Town Stock Exchange to the JSE, so this is a new(ish) listing. Nevertheless, there’s something new for investors on the JSE. Read more about the company in this article.
- Renergen has signed a retainer letter with the US International Development Finance Corporation (DFC) to evaluate making a loan of up to $500 million to finance the development of Phase 2 of the helium and natural gas operations at the Virginia Gas Project. The same lender provided $40 million in funding for Phase 1, so the parties already know each other very well. Renergen has also received many letters of intent to co-lend alongside the DFC, with a cumulative value of over $700 million just in senior debt. This exceeds the remaining debt requirement. Provided the DFC completes a satisfactory due diligence, it seems as though Renergen has quite easily achieved the target of 65% debt funding for Phase 2.
- Alexander Forbes has a new strategy and a reworked brand (AlexForbes), breathing some life into a business that is synonymous with the institutional financial infrastructure in South Africa (both a good and a bad thing). It seems to be working, with results for the year ended March 2022 reflecting operating income up by 7% and headline earnings per share (HEPS) from continuing operations up by 19%. The annual dividend is 45% higher as operating conditions have improved. Although the share price closed 4.88% higher on Monday, it is still down 4.44% this year.
- Fortress REIT has released a trading and pre-close operational update. In the logistics portfolio, vacancies reduced to 1.8% at the end of May from 2.6% at the end of December. The fund does highlight “notable construction cost inflation” over the past six months, which impacts net initial yields on new developments. In the retail portfolio, tenant turnover increased by 8.4% on a like-for-like basis in the year ended April 2022 (this excludes the buildings impacted by the July civil unrest). Vacancies in the retail portfolio have remained at 3.7%. The office portfolio is getting worse, with vacancies increasing from 29.1% to 29.4% over the past five months. Luckily, the office portfolio is 4.5% of total assets and is considered non-core, with a portion under due diligence for rezoning as a residential conversion. Since June 2021, Fortress has disposed of R531 million in properties across the different types of assets and has achieved a profit vs. book value of R25.8 million. A further R334 million worth of properties are held for sale and have not yet transferred. Fortress has R3 billion in cash and a loan-to-value of 39.8%, which is on the high side. Boosted by an expectation that NEPI Rockcastle (in which Fortress holds a 23% stake) will increase distributable earnings by 24% in FY22, Fortress expects distributable earnings in FY23 to be 12.4% up year-on-year. As a final important point to note, Fortress is busy with a process to potentially collapse the dual share structure into one class of ordinary shares.
- MultiChoice has released a trading statement for the year ended March 2022. This business is trading sideways, with benefits from a recovery in advertising revenue being offset by higher content costs, in this case due to a return to a full sporting calendar. HEPS is expected to drop by between 20% and 25% for the year and core HEPS will be between 5% and 8% higher, with unrealised foreign exchange movements as a major contributor to the difference. Leaving aside these adjustments, my view is that MultiChoice is a business in terminal decline.
- Hulamin shareholders may be in for a shock if they check their portfolios today. The share price lost a colossal 27.6% on Monday as the company announced the withdrawal of its cautionary announcement. The company was deep in negotiations with a potential offeror who had indicated a satisfactory deal price to the directors, representing a substantial premium to the Hulamin share price at the time. A due diligence had even been completed to the offeror’s satisfaction. As anyone who has worked in corporate finance will tell you, deals can and do fall over at the eleventh hour on a regular basis. Due to being “unable to agree satisfactory terms with all stakeholders” and the offeror becoming “concerned about recent global economic uncertainty”, the deal is dead. The offeror has walked away, leaving a substantial amount of pain among Hulamin punters. Here’s the really scary thing: the share price is still much higher that it was for most of 2021 before the prospect of a deal turbocharged the price.
- Southern Palladium raised $19 million in its initial public offering, of which around $13.3 million is earmarked for technical drilling and other costs and the rest is for corporate costs and working capital. With trading on the Australian Stock Exchange scheduled to commence on 8th June, the company released a number of important pre-listing disclosures, including the detailed clawback provisions related to the shares issued to pay for the acquisition of the asset supporting the listing. The JSE has approved the secondary listing of the company, which means another new listing is thankfully on the horizon.
- MC Mining has entered into a R60 million standby loan facility with Dendocept, an oddly-named company that holds a 1.5% stake in MC Mining. A first, I found it strange that such a small shareholder would extend a loan facility. I then kept reading and discovered that this is a 12-month convertible facility that is repayable in cash or convertible to shares at a 15% discount to the prevailing 30-day volume weighted average price at date of conversion. The interest rate is prime (currently 8.25%) plus 300 basis points. Proceeds from the facility will be used to make progress at the Makhado hard coking coal project, enhance specific areas of the bankable feasibility study, undertake drilling programmes and support group working capital requirements. It appears as though MC Mining can draw all or part of the facility and it will be available for 12 months.
- In a leading example of lightning striking twice, Gary Shayne has resigned from the board of directors of Ascendis. He wasn’t there for terribly long and even managed to lose money on a leveraged trade during that period. I think it’s time for him to forget about this company once and for all, having been hurt by it more than once.
- Kaap Agri’s deal to acquire PEG Retail Holdings, core to the fuel strategy of the diversified agriculture group, has achieved a resounding endorsement from shareholders with 99.99% approval at the general meeting.
- Universal Partners is currently under a mandatory offer by Glenrock of R18.63 per share. With the price sitting at R20.43, it looks like a silly situation at first blush. The important point here is that the stock is illiquid, so the bid-offer spread of R18.25 – R20.98 tells the real story. Those looking to exit a position, especially a large position, would be better off taking the offer than trying to sell in the open market. The offer closes at 12pm on 17th June 2022.
- Investment holding company Astoria has renewed its cautionary announcement related to the potential acquisition of a 25.1% interest in International Mining and Dredging Holdings for a ticket price of $5.5 million. Agreements are still being finalised for the potential transaction.
- Grand Parade International has met the final condition precedent for the unbundling of the investment in Spur Corporation. This means that Grand Parade shareholders will see Spur appearing in their brokerage accounts on Monday 20th June, like a surprise burger arriving at the door.
- An executive director at Santova exercised options to acquire shares for a total price of R651,000 and immediately sold those shares for R2,415,000 – a tidy profit as part of executive compensation.
- The CEO of Brikor has sold shares in the company. The numbers are small but so is the level of liquidity in the company, so this is important enough to mention.
- Directors of Gold Fields (including CEO Chris Griffith) have bought shares in the company after the nasty drop last week. This makes me happy, as it cements my alignment with them and ensures we lose money together at the moment.
- In another example of insider buying in the gold industry, a director of AngloGold Ashanti has bought around $50,000 worth of shares in the company.
- Discovery co-founder Barry Swartzberg has pledged R796.9 million in shares as security for preference share funding of R187 million. I am incredibly curious about what he may be doing with that capital! The only reason this gets announced on the market is that Swartzberg is a director of Discovery and this is considered a notifiable security arrangement. To be clear, no shares have been bought or sold here – only pledged as collateral.
- The lead independent director of Sun International, Graham Dempster (a name anyone from Nedbank will recognise), has bought around R2.55 million worth of shares in the company.
- It’s worth a mention that Spear REIT CEO Quintin Rossi has been buying shares in the company for his children. There have been a number of these announcements recently. Although the numbers are relatively small, this is a substantial endorsement of the company’s prospects (unless his kids have really been annoying him lately and this is his way of getting back at them). To help with pocket money, the Spear shares will pay a cash dividend on 20th June.
- Associates of a director of MiX Telematics have bought shares in the company worth around $90,000.
- There was significant insider buying at Sabvest Capital, with an executive director buying over R2.5 million worth of shares.
- The special distribution of 200 cents per share by enX Group will be paid on 20th June, a substantial return of cash to shareholders considering the share price closed at R8.99 on Monday. The mandatory offer by MCC Contracts and African Phoenix has also been finalised, with only 0.06% of enX shareholders accepting the offer. This isn’t surprising, considering the offer price was R5.60 and the share price has been trading above R8 for months.
- In the Oasis Crescent Property Fund, unitholders of 34.9% of units qualifying for the distribution elected to receive it in cash. The rest opted to reinvest their distributions in the fund.
