Redemption of Tradehold preference shares likely to have raised R600m to help Steinhoff

By Robert Laing

Christo Wiese has possibly raised about R622m from his JSE-listed property group Tradehold to assist with the credit crunch facing Steinhoff International.

Tradehold‚ whose share price plunged 20% last week because of its association with Steinhoff via Wiese‚ rebounded 8% to R15.48 on Tuesday after announcing it was redeeming all its preference shares for R10 each.

In addition‚ Tradehold said it would pay a 3.6c dividend to its preference shareholders before cancelling them on December 18.

Tradehold’s preference shares have not registered a single trade since their listing on the JSE in February 2015‚ hinting that all 61‚927‚500 are probably owned by Wiese.

Tradehold‚ which reports in pounds because it was historically a UK-focused property group but its portfolio is now mainly in SA and Namibia‚ had £33m cash at August 31.

Steinhoff also continued its rebound on Tuesday morning‚ gaining as much as 34% to R12.49. Steinhoff closed 56% higher at R9.35 on Monday after sinking to low of R5 on Friday‚ less than a tenth of its R55.81 closing price on December 1.

Source:BDproDate: 2017/12/12

Investors’ eyes on Steinhoff property

By Alistair Anderson

Growthpoint CEO Norbert Sasse says Steinhoff’s property portfolio may hold investment opportunities should the group opt to sell some of those assets.

Steinhoff, which is being probed for accounting irregularities, could choose to sell noncore assets, such as land and buildings, to meet credit commitments. This could create opportunities for locally listed property companies.

"We’re aware they have a huge property portfolio, but don’t know much about it. It would clearly be one way in which they could get some liquidity," said Sasse.

Many large private owners of commercial property — where real estate is not a core business — have been reluctant to sell their portfolios over the past couple of years in the hope of attaining higher prices.

A sluggish economy has damped real estate activity and made it harder for buyers and sellers to find one another. Garreth Elston, a fund manager at Golden Section Capital, said Steinhoff had accumulated property assets in various countries, the details of which should emerge in the coming months as the investment community gained clarity about the group.

"Steinhoff does have quite large holdings of investment property and land and buildings. The company’s last annual report [2016] puts these assets at a net book value of €3.73bn [R60bn]," he said.

"Naturally, in a company under investigation for serious accounting irregularities, the concern would be as to the accuracy of the holdings and valuations thereof," he said.

While there could be opportunities for listed and private real estate investors to acquire assets from a distressed Steinhoff, it would be highly likely that most players would wait on the sidelines for more clarity to emerge, Elston said.

Redefine Properties CEO Andrew Konig said it "would be too early to speculate about Steinhoff’s property portfolio".

Source:Business DayDate: 2017/12/12

Fairfax drops plan to buy PPC stake

PPC says Canada’s Fairfax Africa Investments has withdrawn its firm intention to make a partial offer to acquire R2bn of ordinary shares in the cement group for R5.75 per share.

SA’s largest cement maker had in late November 2017 rejected the offer by the African arm of Canadian insurer Fairfax Financial Holdings, saying it significantly undervalued PPC.

This effectively sunk a joint conditional partial offer from unlisted South African cement producer AfriSam and Fairfax Africa Investments. It was conditional on a merger between PPC and AfriSam, subject to a R4bn recapitalisation of AfriSam before any merger.

This means only European cement titan LafargeHolcim — which has cement assets in SA — is left among four potential contenders that had shown varying expressions of interest in merging with or buying some or all of PPC. These included Nigeria’s Dangote Cement and Ireland’s CRH, both of which pulled out recently.

PPC said the independent board continued to engage with LafargeHolcim “in respect of its approach”.

Momentum Securities analyst Sibonginkosi Nyanga said earlier that CRH management was quoted as stating that its strategic priority was markets in Europe and North America and that it would not “overinvest in developing economies”.

“The acquisition of PPC would have differed significantly with CRH’s declared acquisition strategy. With regards to Dangote, chances are [SA’s] Competition Commission remedial action would have outweighed the benefits of the deal.”

At least 25% of PPC’s bigger shareholders earlier rejected Fairfax’s offer. They said PPC was worth between R8 and far more than R10 per share, if a control premium was added.

PPC has 11 cement factories in SA, Botswana, the Democratic Republic of the Congo, Ethiopia, Rwanda and Zimbabwe.

A large capital expenditure programme is mostly complete, with newly commissioned operations in the rest of Africa set to contribute nearly 50% of group profit within two or three years.

The AfriSam-Fairfax proposed merger ratio was based on a share exchange of 58 PPC shares for 42 AfriSam shares, valuing PPC at a 62% premium based on pro forma earnings multiples of the two businesses, according to AfriSam.

But PPC told Business Day last week that it was “on a fundamentally different footing both operationally and from a balance sheet and cash flow perspective” after the group chalked up attributable net profit in the six months to September, nearly tripling it to R294m from R102m in the same period in 2016.

Source:Business DayDate: 2017/12/12

4AX chief welcomes Harith stake deal

Harith General Partners CEO Tshepo Mahloele had bought an unspecified stake in 4 Africa Exchange (4AX) through LeBashe Financial Services, the new bourse said on Monday.

Mahloele has been added to the exchange’s six nonexecutive directors, which include Maponya Group CEO Chichi Maponya and Kagiso Trust cofounder Johnson Njeke.

“Mahloele is a superb inclusion to our super squad,” 4AX CEO Fay Mukaddam said.

Harith, with offices in Johannesburg and Ivory Coast, manages a $630m pan-African infrastructure fund.

Mahloele is one of its originators. He holds a BProc obtained from Rhodes University and has also completed the Harvard Advanced Management Programme. Before joining Harith, Mahloele headed the corporate finance and Isibaya Fund division of the Public Investment Corporation.

Mukaddam said LeBashe and Mahloele offered immense strategic value in expanding A2X, which has three companies listed on its market.

“The 4AX solution is tailored for the diverse Mzansi market, making it accessible to shareholders from all walks of life, as well as a cost-effective and seamless transition to a regulated space.

“As such, we look forward to exploring these synergies further and identifying innovative ways to leverage on the shareholder partnership to drive opportunities for the institutional and retail investor communities of SA,” Mukaddam said.

Source:Business DayDate: 2017/12/12

Metrofile buys Kenyan data business

IT service management company Metrofile has agreed to buy G4S Secure Data Solutions (Kenya) in a deal worth up to 2.1-billion Kenyan shillings (about R281.4m).

The transaction is a strategic move, Metrofile says, that will increase its footprint in Africa and provide it with an expanded international client base, strong management team and local expertise in the records management industry.

Metrofile’s shares gained 2.3% to close at R4.09 in light trading on Monday.

The target firm, also called SDS Kenya, is the largest records-management company in East Africa and is being sold by G4S International Holdings and Nurun Investments.

Metrofile said that the deal was in line with its plans to build its footprint in selected African countries.

“The board believes that the Kenyan records management market has significant potential for growth and that SDS Kenya is a well-established business that will provide an ideal strategic platform to extend Metrofile’s presence in the broader East Africa region,” the company said.

SDS Kenya operates a records management business based in Nairobi and specialises in corporate archiving and record management.

At the end of October, SDS Kenya’s net asset value was reported to be about R21.2m.

The company’s earnings before interest, taxes, depreciation and amortisation for the 10 months to end-October were about R23m, or R27.5m on an annualised basis.

Metrofile said the transaction would be settled in cash from existing resources and using a loan from Standard Bank.

“The Metrofile board is considering a capital raise of up to R100m by way of an underwritten rights issue to reduce the bank debt utilised to fund the purchase consideration.”

Metrofile, which offers physical storage and digital services, as well as the confidential destruction and recycling of records, has been growing its presence in the Middle East and other African countries.

In the year to end-June, Metrofile’s revenue fell by 1% to R769.2m while headline earnings increased by 4% to R135.2m. After reaching a high of R5.26 in February, shares in Metrofile have declined through the course of 2017.

was the reported net asset value of SDS Kenya at the end of October


Source:Business DayDate: 2017/12/12

Sea Harvest bids to net Viking

ea Harvest, the fishing enterprise controlled by empowerment company Brimstone Investment Corporation, looks set to land its first acquisition in South African waters since listing on the JSE in March.

A cautionary announcement released on Monday disclosed that Sea Harvest, which has hake operations in SA and a controlling stake in Australian diversified seafood business Mareterram, had started negotiations with unlisted Viking Fishing Holdings.

Family-owned Viking has been in the news since it lost a sizeable portion of its inshore hake-fishing allocation, a development that the company vainly fought to overturn in court.

The Viking deal is the third fishing sector acquisition undertaken by a black-owned company in 2017.

In May, the unlisted TerraSan Group bought out fish canning specialists the Saldanha Group, while Premier Fishing, which also listed on the JSE in early 2017, snapped up a controlling stake in the Port Elizabeth-based Talhado squid-fishing business.

An increase in corporate action throughout the local fishing sector has been predicted in the run-up to the 2020 fishing rights allocation process.

The proposed Viking deal appears to cater to smaller fishing sector participants with Sea Harvest, which is still flush with capital raised at listing, heading a broad-based black economic consortium in the bid to take over Viking.

The fishing activities of Viking, one of the largest fishing enterprises in SA, include products such as hake, pilchards, prawn, snoek and angelfish.

The consortium, which is led by Sea Harvest, will also bid for 50% of Viking’s sprawling aquaculture business, which spans abalone, oysters, mussels and rainbow trout.

Recently, Viking Aquaculture also acquired a 30% stake in Abagold’s Specialised Aquatic Feeds business. A fishing-sector source, who asked not to be named, said that the pricing of the deal would be interesting to gauge, considering Viking had lost a large part of its core hake allocation.

The source said that the Viking deal would offer Sea Harvest much-needed diversification away from its core hake fishing endeavours.

“The deal will make Sea Harvest a bigger hake player than [AVI-controlled] rival I&J and has the potential to transform Sea Harvest into a ‘South African fishing champion’.”

The proposed Viking deal follows hard on the heels of Sea Harvest’s 56% Australian subsidiary, Mareterram, delving into the West Australian Spanish mackerel fishing sector.

Early in November Mareterram acquired two mackerel licence packages — including a fishing fleet, support vessels as well as licences.

Mareterram’s shift into mackerel fishing adds further diversity to the company’s prawn, scallop and crab fishing interests in Australia.

Source:Business DayDate: 2017/12/12

Blue Label and 3G Mobile deal gets regulatory thumbs up

By Staff Writer

Blue Label Telecoms said on Monday that the Competition Tribunal had approved its deal to acquire the remaining (52.63%) shares in smartphone distributor 3G Mobile‚ in a R1bn deal that will expand its suite of services.

3G Mobile distributes and finances mobile devices and handsets to major retailers and cellular network providers.

Blue Label‚ which distributes prepaid products such as airtime and electricity‚ said the deal would be implemented in February after fulfilling the last regulatory requirement.

The total value of the transaction is R1.9bn‚ after Blue Label acquired 47.37% in 3G‚ for R900m‚ earlier in the year.

Source:BDproDate: 2017/12/12

Analysts hit out at forced selling by EOH directors

Forced selling by EOH directors faced with margin calls on geared positions, which collapsed the share price last week, drew heavy criticism from analysts on Monday.

“If I had a board of directors doing that I would fire them. It puts the share price at risk,” said Just One Lap founder Simon Brown. Although EOH’s actions were not illegal, they threatened acquisitive growth ambitions, since past acquisitions had been largely funded through share issuances, he said.

Earlier in the day, EOH disclosed that the substantial drop in its share price — 35% on Thursday — was caused by margin calls against equity-financed transactions, including to two EOH directors.

An investor receives a margin call from a bank or stockbroker if the value of a share they have bought with borrowed money falls below a certain level. The investor must then either deposit more money into the loan account or sell the asset to cover the margin call.

Jehan Mackay, CEO of EOH’s public services division, had been forced to sell more than R130m worth of EOH shares just to meet the margin call, suggesting his shareholding in EOH was highly leveraged.

Finance chief John King was forced to sell more than R16m worth of shares.

It was risky to take out fixed debt on a floating asset such as shares, said Keith McLachlan, fund manager at AlphaWealth. “I don’t like management teams to have geared positions on the companies they manage, as they then watch the share price rather than focus on their jobs.”

Transactions by Mackay and King were done to buy more EOH shares at the time, reflecting their confidence in the company and its long-term prospects, EOH said.

McLachlan said it was good to have management teams who were aligned to the interests of shareholders, but not where a collapse in the share price might lead to an insolvent board, which would no longer qualify to hold directorships.

Cy Jacobs, founder and MD of 36One Asset Management said it was uncommon and “totally undesirable” for directors to take derivative positions on shares in their companies.

King and Mackay could have paid for the shares in cash and did not have to sell, he said.

EOH said it had finalised an agreement to sell Grid Control Technologies, Forensic Data Analysts and Investigative Software Solutions back to their original shareholders. At least one of these businesses, Forensic Data Analysts, and the director of all three companies, Keith Keating, are implicated in an investigation into procurement irregularities involving the South African Information Technology Agency and the South African Police Service.

EOH had decided to unwind the November 2015 purchase of these businesses because of failure to meet performance warranties. This had been expedited by “recent media allegations” against Keating, it said.

The acquisition of the businesses had undergone a “rigorous due diligence process” and annual audits of the companies did not raise any red flag.

EOH had appointed Edward Nathan Sonnenbergs to conduct a “fact-finding review” of the commercial activities of the businesses, the group said. The law firm would have oversight of all material public sector contracts in future. “This is in addition to the internal compliance measures adopted by the board’s audit committee in July this year, which includes a review of EOH’s governance framework,” it said.

The market was encouraged by EOH’s announcement, with the share climbing 8.54% on Monday, after a 5.6% gain on Friday, to close at R51.58.

Source:Business DayDate: 2017/12/12

ArcelorMittal SA appoints new CE

By Andries Mahlangu

ArcelorMittal SA has appointed Hendrik “Kobus” Verster as its new chief executive‚ replacing Wim de Klerk who in retiring in January.

Verster will start in January as CE designate before officially settling into that role in February‚ the steel producer said on Monday in a statement.

Verster previously worked for ArcelorMittal SA as chief financial officer and executive director between 2006 and 2010.

De Klerk only served in the CEO role for a little more than a year‚ taking over from Paul O’Flaherty‚ who held the top job for only 18 months.

SA’s biggest steel producer has‚ for some time‚ been battling low steel demand and rising input costs‚ compounded by cheap steel imports.

The share price was up 0.67% to R4.53 in mid-afternoon trade on the JSE‚ valuing the company at about R5bn.

Source:BDproDate: 2017/12/12

Treasury must condemn Steinhoff scandal more forcefully‚ Scopa’s Themba Godi urges

By Bianca Capazorio and Linda Ensor

The chairperson of Parliament’s Standing Committee on Public Accounts (Scopa)‚ Themba Godi‚ has called on the Treasury to be more “strident in its condemnation of the Steinhoff scandal than it has been” and called for investigations by the South African Revenue Service (SARS)‚ the Reserve Bank and the Financial Services Board (FSB).

In a statement released on Monday‚ Godi said Scopa called for “accountability” in the Steinhoff corruption scandal‚ and “urgent‚ firm and decisive action to deal with the wrongdoers”.

He said Scopa would call Steinhoff executives‚ the PIC‚ the Hawks‚ the South African Revenue Service and the South African Reserve Bank to account in the new year.

“SA’s reputation is in the gutter because of political and corporate corruption. All progressive and patriotic South Africans must put a stop to these acts‚” Godi said.

The portfolio committee on public service and administration meanwhile expressed concern over how the probe into irregularities at Steinhoff and the resultant losses in its share price would affect public servants’ pension funds‚ which could result in losses of up to R12.5bn in pension fund investments.

“This is a sad state of affairs when it involves years of pension savings of public servants. This can lead to instability within the public service‚ and would impact negatively on service delivery on important government programmes and projects‚” committee chair Cassel Mathale said.

“As the portfolio committee on public service and administration‚ we call upon all regulatory authorities and the criminal justice system to investigate this matter and come up with truthful facts behind the matter. This would allay fears among public servants and all concerned‚ as well as prove that the public service is an entity of integrity‚” Mathale said.

Meanwhile‚ The DA said it wanted Parliament’s standing committee on finance to probe the corporate scandal‚ which it said might be one of the biggest in SA’s history.

DA finance spokesperson David Maynier has written to committee chairperson Yunus Carrim‚ asking him to consider scheduling public hearings on the scandal. He has provided Carrim with a list of people he believes should appear. These include Treasury director-general Dondo Mogajane‚ to give an overview of the collapse of Steinhoff and its effects; the supervisory board of Steinhoff International as well as its management board.

Other suggested names are Steinhoff shareholder Christo Wiese and the company’s directors Johan van Zyl and Steve Booysen; former CEO Markus Jooste; and Steinhoff Africa Retail Group CEO Ben Le Grange.

Also on the proposed list is auditor Patrick Seinstra from Deloitte; Financial Services Board executive officer Dube Tshidi‚ JSE CEO Nicky Newton-King; South African Revenue Service commissioner Tom Moyane; Reserve Bank governor Lesetja Kganyago; Independent Regulatory Board for Auditors CEO Bernard Agulhas; Government Employees Pension Fund’s principal executive officer Abel Sithole; and Public Investment Corporation CEO Dan Matjila.

“We need to be tough on crime in the public sector‚ and tough on crime in the private sector‚ and that is why we need to get stuck into what may be one of the biggest corporate scandals in the history of SA‚” Maynier said in a statement.

Source:BDproDate: 2017/12/12

JSE to probe Steinhoff for possible breach of listing requirements

By Andries Mahlangu

The JSE said on Monday it had launched an investigation to determine if embattled Steinhoff International had breached its listing requirements.

This included any breaches in relation to previous financial disclosures the company had made to the public.

Steinhoff has been rocked by an accounting scandal‚ which wiped off as much as R215bn off its market value in the space of a week.

The local bourse operator also said in the statement it would stick to its original decision not to suspend trading in Steinhoff shares‚ indicating that the company had disclosed as much price sensitive information as it was able to.

Another reason for not suspending the shares was that investors trading on the JSE would be at the disadvantage since Steinhoff was not suspended on the Frankfurt Stock Exchange‚ where it has its primary listing.

To help restore investor trust‚ Steinhoff took measures to strengthen corporate governance‚ through appointing a board sub-committee.

The company also appointed US investment bank Moelis & Company and management consultants AlixPartners on Sunday.

Moelis will support and advise on the group's discussions with its lenders‚ while AlixPartners will assist on liquidity management and operational measures.

The share price had recovered 40%‚ to R8.40‚ in late trade on the JSE on Monday‚ valuing Steinhoff at about R36.2bn.

Source:BDproDate: 2017/12/12

Sasol likely to rise on Brent cracking USD65

By Robert Laing

Sasol‚ which rose 1.43% to R424.50 on Monday‚ may rise further on Tuesday as a result of the Brent crude oil price rising 1% to more than $65 a barrel for the first time in nearly three years.

The price of Brent crude oil rose due to supply disruptions while cracks in a North Sea pipeline are repaired.

The price of West Texas Intermediate (WTI) oil rose 0.43% to $58 a barrel on Tuesday morning. WTI is tradable on the JSE via an exchange-traded note managed by Standard Bank‚ SBAOIL‚ which rose 1.74% to R10.55 on Friday‚ but only gained 1c to R10.56 on Monday.

Rising oil prices helped BHP gain 1.73% to A$27.67 in Sydney ahead of the JSE’s opening on Tuesday morning‚ buoying the S&P/ASX 200 index 0.2%. BHP rose 1.17% to R248.43 on the JSE on Monday.

Labat Africa‚ the former owner of SA’s only silicon chip factory Sames‚ which now describes itself as a black economic empowerment transport and logistics group‚ said on December 8 that it expected to report on Tuesday that basic and headline earnings per share fell 44.8% to 1.81c for the year to end-August.

Statistics SA is scheduled to release its September quarter employment statistics at 11.30am and October’s manufacturing production and sales at 1pm.

Investec Bank economist Kamilla Kaplan forecast that manufacturing output rebounded to about 0.9% in October from the same month in 2016 after contracting 1.6% in September.

“The manufacturing sector has derived some support from the strengthening global demand conditions but growth in the sector is being constrained by weak domestic demand and persistent policy uncertainty‚ which has weighed on confidence levels‚” Kaplan said in her weekly note e-mailed on Friday.

Source:BDproDate: 2017/12/12

Investec says Steinhoff exposure negligible

By Robert Laing

Investec’s share price rose as much as 4.1% to R88.49 on Monday morning after it reassured investors that its exposure to Steinhoff International was negligible.

Investec has two shares trading on the JSE which are theoretically identical. Possibly thanks to the rand strengthening 0.35% against the pound to R18.28‚ Investec plc shares with code INP strengthened more than its limited shares with code INL‚ which rose 3.5% to R87.99.

Investec said in a statement on Monday that its loans to Steinhoff represented less than 0.25% of its total R464.8bn credit exposure at September 30.

Its loans to Steinhoff Africa Retail (Star) were less than 0.1%.

“Based on the information currently available to the group‚ Investec is not expecting to suffer any losses on these credit exposures‚” Monday’s statement said.

“The exposures are largely to Steinhoff Africa’s subsidiaries‚ with an immaterial exposure to Steinhoff.

“The majority of the transactions have been undertaken by Investec Bank‚ with Investec plc having an insignificant exposure to Steinhoff.

“The exposures to Steinhoff Africa largely comprise lending exposures and overnight facilities‚ and are secured by guarantees from certain of the Steinhoff Africa and Star subsidiaries.”

Investec’s announcement followed a call by the Financial Services Board on Friday for all financial institutions to supply details of their exposure to Steinhoff.

Source:BDproDate: 2017/12/11

PPC share drops after Fairfax withdraws offer

By Robert Laing

PPC’s share price fell 3% to R6.40 on Monday after it notified shareholders Canadian financier Fairfax would not proceed with a formal offer.

This leaves just Swiss building materials group LafargeHolcim as PPC’s sole remaining bidder following Dublin-based CRH’s announcement on December 7 that it had decided not to make an offer after doing an initial due diligence.

On October 6‚ Nigerian cement producer Dangote announced that it had decided to terminate talks with PPC.

PPC advised shareholders on November 11 to reject Fairfax’s R5.75 per share offer‚ which was made in September when its share price was about R5.50.

Interest from various suitors has seen PPC’s share price rebound from a low of R3.46 in August following the resignation of CEO Darryll Castle to a high of R7.68 in November.

“PPC shareholders are hereby advised that on December 8‚ the independent board received Fairfax’s formal notification that it will not proceed with the partial offer and that‚ accordingly‚ the Fairfax partial offer circular will not be posted to PPC shareholders‚” Monday’s statement said.

Conditions that Fairfax had set on its proposed offer included PPC agreeing to merge with Afrisam‚ and its R5.75 per share offer was limited to R2bn worth of shares being bought.

On October 27‚ PPC and LafargeHolcim issued statement saying the Swiss group “contemplates a combination of certain African assets‚ a partial cash offer and a special dividend”.

Source:BDproDate: 2017/12/11

Sea Harvest in talks to acquire Viking Fishing

Sea Harvest and its parent Brimstone Investments say negotiations are under way to acquire Viking Fishing for an undisclosed amount.

Sea Harvest said on Monday that it was leading a consortium of broad-based black economic empowerment investors which is considering buying all of Viking Fishing.

Under the deal the JSE-listed fishing group‚ which was unbundled from Brimstone in March‚ will also acquire 51% of Viking Aquaculture.

Sea Harvest said Viking‚ founded in 1980‚ supplies seafood including hake‚ abalone and prawns to wholesalers and retailers.

Conditions on the deal include due diligence of Viking Fishing and Viking Aquaculture‚ along with ministerial and competition authority approvals.

Sea Harvest’s share price was flat R11.55 in early trade on the JSE‚ giving Sea Harvest a market value of R2.9bn.

Source:BDproDate: 2017/12/11

Metrofile completes acquisition of Kenya’s Secure Data Solutions

By Karl Gernetzky

Records and information management group Metrofile said on Monday it had completed a share purchase agreement for the entire capital of G4S Secure Data Solutions Kenya (SDS Kenya)‚ the largest record management company in East Africa.

The JSE-listed company said the maximum purchase consideration of SDS Kenya was about R281.4m‚ and would allow Metrofile to increase its foot print in Africa‚ and expand its international client base.

The purchase would be settled in cash from Metrofile’s existing resources and a facility arranged for this purpose with Standard Bank. The Metrofile Board was considering raising capital of R100m by way of an underwritten rights issue to reduce the bank debt utilised to fund the purchase consideration.

“The transaction demonstrates Metrofile’s positive intention to continue the roll-out of its services into selected African countries through organic as well as acquisitive growth‚” the company said.

SDS Kenya is to be acquired from UK-based GFS Secure Data‚ and Nurun Investments‚ a Kenyan company. SDS Kenya is based in Nairobi‚ specialising in all aspects of corporate archiving an management

On the basis of unaudited management accounts as at October 31‚ SDS Kenya’s net asset value was stated to be approximately R21.2m‚ and its earnings before interest‚ tax‚ depreciation and amortisation were approximately R23m.

At 10am Metrofile’s share price was up 2.25% to R4.09‚ having lost 18.04% in the course of 2017.

Source:BDproDate: 2017/12/11

EOH rebounds after ‘involuntary trading’ sent it reeling last week

By Robert Laing

EOH’s share price rebounded 7.4% to R51.05 on Monday morning after it said the previous week’s 44% crash was caused by “involuntary trading” when two directors’ were sold by stockbrokers.

EOH said shares worth R143m were sold by its chief financial officer John King and executive director Jehan Mackay.

Mackay sold R9.4m worth of shares on Tuesday at an average price of R78‚ R17m worth on Wednesday at an average price of R72‚ R91m worth on Thursday at an average price of R50 and R9.4m on Friday for an average price of R31.

EOH said this was a forced sale of shares triggered by financial institutions “due to the shares being linked to an equity finance transaction resulting in a margin call”.

King similarly sold R16m worth of shares between Wednesday and Friday for the same reason.

“The equity finance transaction was implemented to acquire more EOH shares at the time‚” the company said in an “involuntary directors’ dealing” statement on Monday morning.

Furthermore‚ EOH said it had appointed law firm Edward Nathan Sonnenbergs to investigate allegations against its subsidiaries Grid Control Technologies‚ Forensic Data Analysts and Investigative Software Solutions.

EOH said it had “finalised the sell-back agreement in order to unwind its acquisition” of the three companies accused of paying kickbacks to secure contracts from the police.

Source:BDproDate: 2017/12/11

Steinhoff pins hope on Moelis and AlixPartners

By Robert Laing

Steinhoff International attempted to staunch the bleeding by appointing US investment bank Moelis & Company and management consultants AlixPartners on Sunday.

"Moelis will support and advise on the group's discussions with its lenders, while AlixPartners will assist on liquidity management and operational measures," Steinhoff said in a statement released on Sunday.

On Friday, half an hour before the JSE’s closing bell at 5pm, Steinhoff announced that a meeting with its bankers that was to have taken place on Monday would be delayed until December 19, contributing to its share closing 40% lower at R6.

On the Frankfurt Stock Exchange, which trades until 8pm on weekdays, the reaction to the announcement was more muted, with Steinhoff closing 15% lower at €0.55.

Since the market had time to react to the furniture retailer’s announcement on Friday evening, it may help Steinhoff’s share price halt its slide on Monday. The share was decimated last week with a plunge from R55.80 to R5.

Stock exchanges were generally buoyant on Monday morning following better than expected November US employment figures.

The US added 221,000 private sector jobs outside of agriculture, beating an economist consensus of 190,000.

This helped the S&P 500 index gain 0.55% on Friday, setting the tone for Monday morning where Tokyo’s Nikkei 225 index was up 0.43% and Hong Kong’s Hang Seng index was up 0.5%.

Statistics SA is scheduled to release October’s tourist accommodation report at 10am, its land transport survey at 11.30am, and its food and beverages report at 1pm.

Source:BDproDate: 2017/12/11

EOH in puzzling share collapse

Markets were kept in the dark on Friday over what had triggered the collapse in software and technology company EOH’s share price a day earlier.

Investors were left to speculate that corruption allegations levelled at one of the businesses the group owned — but had now sold — were behind the sudden fall. EOH declined to comment on this assumption.

On Wednesday, the Daily Maverick reported that the Independent Police Investigative Directorate (Ipid) had raided the home of Keith Keating, who is a director of three businesses the EOH group bought in November 2015 for R868m and is now in the process of selling.

Keating and at least one of these businesses, Forensic Data Analysts (FDA), have been implicated in procurement misdeeds involving the South African Information and Technology Agency and the South African Police Service.

After Thursday’s market close, EOH said it had agreed with the former shareholders of FDA, Grid Control Technologies (GCT) and Investigative Software Solutions (ISS) to “unwind” the purchase of these businesses, effective October 31 2017. It made no mention of Keating, the Ipid raid or the allegations levelled at FDA.

EOH describes itself as the largest technology services company in Africa. It employs 12,500 people and is present in 50 countries outside SA.

In April, investigative journalism unit amaBhungane implicated the company in wrongdoing involving information technology contracts at the social development department. The article was later amended to reflect that no evidence was found to prove that EOH had acted unlawfully in winning such contracts — an allegation the group strongly denied.

After a 35% slide on Thursday, EOH’s share price recovered 5.6% on Friday to close at R47.52. The stock is down about 72% over the past year. This raises questions over how EOH will fund future acquisitive growth, as it has relied heavily on issuing shares as payment for the companies it buys.

Just over half of the purchase price of FDA, GCT and ISS was paid for through the issue of shares, which at the time were trading at about R150.

EOH had maintained a strategy of acquisitions since listing in 1998, buying about 100 businesses since then, but possibly more, Keith McLachlan, a fund manager at AlphaWealth, said on Friday.

“The market is saying it doesn’t trust that EOH has communicated the full picture,” he said. “I stopped going to their results presentations a few years ago because they gave no detail [and] answered direct questions with vague answers.” McLachlan estimated that a fifth to a quarter of EOH’s business came from the public sector.

EOH director Jehan Mackay, and companies of which his family trust is a beneficiary, sold shares on November 24, December 1 and December 4 in 2017, when the share was trading at about R80. The value of these sales exceeded R18m.

Meanwhile, founder and former CEO Asher Bohbot said on Friday he had not sold an EOH share in “many years”.

He holds between 3.5% and 4% of the firm and is no longer a director, so his share dealings do not need to be publicised.

Source:Business DayDate: 2017/12/11

New bourse starts operating with listing of Imperial’s empowerment partner

Equity Express Securities Exchange (EESE) became SA’s fourth new exchange on Friday, listing Ukhamba Holdings, Imperial Holding’s broad-based black economic empowerment partner, with a market capitalisation of R340m.

EESE had its beginnings in the over-the-counter (OTC) trading platform, Equity Express, where Ukhamba has traded since 2013. Phuthuma Nathi and Welkom Yizani, the black economic empowerment schemes of MultiChoice and Media24, respectively, trade on Equity Express.

“We are hopeful that Phuthuma Nathi will list on our exchange,” EESE CEO Anthony Wilmot said on Friday. Phuthuma Nathi had applied for its own exchange licence, which was awaiting Financial Services Board approval, he said.

EESE joins ZAR X, 4 Africa Exchange and A2X Markets as SA’s fourth new licensed exchange. The abundance of new stock exchanges has been partly driven by a change to OTC trading rules, which prevents OTC exchanges from matching shareholders. To continue on an OTC basis, an exchange can only advertise buy and sell orders.

Shareholders then needto negotiate directly with one another to match a trade.

Life insurer Assupol, which traded on Equity Express, had expressed interest to list on the EESE, said Wilmot.

Source:Business DayDate: 2017/12/11

Trade tip

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