Ghost Bites (Absa | Sable Exploration and Mining | Transcend Property + Emira | Trustco)

Absa implemented its new B-BBEE deal (JSE: ABG)

The deal caused a substantial new issuance of shares

In what I still believe was a missed opportunity for the broader investor community in South Africa, Absa has concluded its new B-BBEE deal and issued shares that represent 7% of total shares in issue with all said and done.

In my view, the bank was in a perfect position to execute a successful structure for external Black investors. The bank can give unbeatably cheap funding and would’ve added a banking structure to the existing universe of listed B-BBEE structures.

But alas, this deal isn’t open to the public.

Sable Exploration and Mining unveils a joint venture (JSE: SXM)

The deal on the table is to beneficiate ore into magnetite

Sable Exploration and Mining is an obscure listed company with a tiny market cap. The company is raising capital and has announced a joint venture transaction that potentially gives it a cash flow positive asset.

The joint venture will commission, operate and maintain a Dense Medium Separation beneficiation plant using the ore from the Ironveld Mining Lapon mining right. Ironveld Mining is one of the indirect joint venture partners.

Sable Exploration and Mining will invest R15 million in the plant. Once the loan and interest have been repaid, a 50% share in the plant will be transferred by Sable to the joint venture partner for nominal value.

To fund the R15 million, Sable will use the proceeds of the R52.2 million rights offer that is underway. PBNJ Trading and Consulting is the anchor shareholder in Sable and has ensured that at least 90% of the rights offer amount will be raised. This takes the form of a commitment to follow rights on existing shares and an underwriting agreement.

Transcend Property releases the Emira buyout circular (JSE: TPF | JSE: EMI)

This is a combined circular as the parties are working together on this transaction

When the board of the target company supports a buyout offer by another listed company, you’ll see them issue a combined circular. When deals are hostile i.e. the target board doesn’t support the offer, then we are in an entirely different regulatory framework where each company releases circulars.

This transaction is firmly the former, with Emira already holding 68.15% of shares in Transcend and looking to acquire the rest at a price of R6.30 per share.

Sadly, the rationale for this buyout is a story that we are seeing over and over again on the local market:

If you would like to read the full circular, you’ll find it here.

Trustco founders to convert debt to equity (JSE: TTO)

A circular will be issued to shareholders for this transaction

The founding family of Trustco has an outstanding loan of N$1.479 billion to the company. In an effort to get rid of this legacy structure, the company wants to grant a conversion option to the family to receive a similar value in shares in settlement of the loan.

The issue price would be N$1.41 per share. The Namibian dollar usually trades at 1:1 with the rand, so this would imply R1.41 per share vs. the current share price of R0.50.

This loan was the cause of a huge fight between Trustco and the JSE around the application of accounting rules. In great news for the lawyers on both sides, that fight is currently under appeal at the Supreme Court of South Africa, with the High Court having ruled in favour of the regulators and against Trustco.

Little Bites:

• Director dealings:
  • Des de Beer bought shares in Lighthouse Properties (JSE: LTE) worth R956k.
  • The family trust of a non-executive director of Nedbank (JSE: NED) bought shares worth nearly R393k.
  • An associate of a senior executive of Renergen (JSE: REN) has bought shares worth over R285k.
  • An associate of a director of Afrimat (JSE: AFT) sold shares worth R149k.

• In case you are following Kibo Energy (JSE: KBO), subsidiary Mast Energy Developments has extended the completion date for its joint venture to 21 September. This is to finalise the international flow of funds that is part of the deal.

• Trematon Capital (JSE: TMT) has renewed its cautionary announcement that has been in place since July. There are no details about what the company is busy negotiating.

• Sasfin (JSE: SFN) announced that Sasfin Bank’s credit rating has been affirmed by Global Credit Rating Co with a stable outlook.

• I warned from the very beginning that the aReit (JSE: APO) listing looked like a dog to me. Time has proven me correct, with the latest announcement being the rather shocking update that auditors Mazars have resigned because of non-payment of fees. Despite the company trying to convince them otherwise, Mazars will not change their minds. It really does tell you everything you need to know about this company.

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