Ghost Bites (Ascendis | Finbond | FirstRand | Kibo Energy | Mondi | Murray & Roberts | Stefanutti Stocks)

Listen to the latest episode of Ghost Wrap here, brought to you by Mazars:

At Ascendis, Surgical Innovations is out of business rescue (JSE: ASC)

It’s good to see this process achieve the intended outcome

The concept of business rescue is becoming increasingly entrenched in South Africa. Sometimes it ends in a fire sale, like we are seeing at Rebosis. Other times it buys enough time to find a strategic shareholder, like we’ve seen at Tongaat Hulett.

At Ascendis, the process has worked well for the Surgical Innovations subsidiary. The announcement is light on financial details, but it notes that outstanding disputes have been resolved and that relationships with suppliers, customers and other stakeholders have been “strengthened” – although one wonders how happy the suppliers are after this process.

Most importantly, Surgical Innovations is a solvent and commercially viable operation. That’s what the process set out to achieve.

Finbond narrows its losses (JSE: FGL)

A smaller loss is still a loss

For the six months to August 2023, Finbond has flagged that the headline loss per share will significantly improve from -8.2 cents per share to between -1.4 and -3.1 cents per share.

Although this is obviously still a loss, it’s heading in the right direction. Detailed results are expected to be released on 27 October.

FirstRand announces major leadership changes (JSE: FSR)

Mary Vilakazi is taking the top job in the group

I’ll start with the chairman role at FirstRand, as Roger Jardine is stepping down to “explore options to best serve South Africa” – the gift of being able to spend your time doing what you are passionate about rather than what you need to get paid for. Johan Burger (ex-CEO of the group) will come in as chairman. He retired as CEO back in 2018, so he is now independent.

We now get to the really big news, which is that Alan Pullinger is stepping down as group CEO after a period of six years, which was the intended tenure when he joined the group. Mary Vilakazi moves from COO to CEO, having joined the group in 2018 from MMI Holdings. This is a great example of internal succession planning.

It’s also important to note that Jacques Celliers is moving from CEO of FNB (the bank) to take up a new role as executive head of group fintech. This tells you a lot about where the bank is focusing.

Finally, CFO and financial director of FirstRand, Harry Kellan, will become CEO of FNB. The CFO of FNB (Markos Davias) moves up to the group CFO role. Finally, Gideon Joubert (CFO of the African portfolio) comes in as CFO of FNB.

Long story short, the multi-year succession programme has worked out. And of course, there is great excitement around a black female CEO of a large South African financial banking institution!

Kibo Energy exits the Botswana coal-based business (JSE: KBO)

Before you get too excited, the price is payable in shares rather than cash

Kibo Energy is focused on renewable energy. The company wants to exit all its coal assets, which is why it has agreed to sell 35% in Kibo Energy Botswana (a coal-based power project) to Shumba Energy for a price of $375,000. The project was previously impaired to zero.

Unfortunately, the price isn’t settled in cash. Kibo will receive shares in Shumba, listed on the Botswana Stock Exchange.

All good and well, but there is no “exit from coal” unless the shares in Shumba are sold.

Mondi is out of Russia (JSE: MNP)

In happy news, the deal closure was faster than anticipated

A deal isn’t a deal until the money in the bank. When we are talking about something as sensitive as trying to sell a Russian business, the risk of something going wrong is even higher. I’m sure Mondi executives and investor are breathing a collective sigh of relief that the Syktyvkar deal has closed and more than 70% of the purchase price has been received.

Sezar Invest LLC bought the businesses from Mondi for RUB 80 billion, a perfect example of how sanctions effectively transfer wealth from international players to in-country players at bargain prices. Mondi has received RUB 57 billion and has a letter of credit to receive the remaining RUB 27 billion in two equal instalments in each of November and December 2023.

The group plans to distribute the proceeds to shareholders.

Murray & Roberts seems to be rebuilding Australia (JSE: MUR)

Multiple times bitten, still not shy?

If you’ve been following the Murray & Roberts story, you’ll know that the group has taken a great deal of pain and that much of that pain has been in Australia.

In the fallout, the company hoped to regain control of RUC Cementation Mining Contactors. This unfortunately was not possible in the legal wrangling.

The company clearly wants to be in the region despite all the anguish, announcing that Cementation APAC (a subsidiary in Australia) is being “capacitated” (i.e. resourced with people etc.) to provide engineering and contracting services to mining clients in the Asia-Pacific region.

Stefanutti Stocks gets a step closer to the arbitration award (JSE: SSK)

The fight relates to the border gate road in Zambia

Construction really is a tough game. Contractual disputes tend to be drawn out and expensive, like the one related to Stefanutti Stocks’ construction of the Kalabo-Sikongo-Angola border gate road in the Western Province of Zambia.

The client applied to have the Arbitral Tribunal award set aside. The judge ruled against the client (with cost), which paves the way for Stefanutti Stocks and its joint venture partner to apply to the Zambian courts to have the award made an order of court.

We can be certain that the lawyers will make money. Everything else is uncertain, like the timing and quantum of receipts under the award. For now, the award hasn’t been recognised in the financial statements.

Little Bites:

• Director dealings:
  • A prescribed officer of ADvTECH (JSE: ADH) sold shares worth R3.2 million.
  • Every director dealings announcement deserves a read. A director of Growthpoint (JSE: GRT) is above the minimum shareholding requirement under company policy (100% of fixed remuneration) but still kept a portion of the latest shares that vested, selling only enough to cover the tax. He could’ve just as easily sold all the shares, hence why I’m mentioning the decision to keep a portion.
  • Des de Beer has bought shares in Lighthouse Properties (JSE: LTE) worth R185k.
  • A director of Libstar (JSE: LBR) has bought shares worth R48k.

• Novus Holdings (JSE: NVS) still doesn’t have a CEO. Andre van der Veen was appointed as executive chairman on 1 April for six months and this has been extended for another six months while the company searches for a CEO.

• Grindrod Shipping’s (JSE: GSH) acquisitions of the two ship management companies from Taylor Maritime have both become legally effective. They were first announced at the end of September, so this deal was pretty seamless.

• Workforce Holdings (JSE: WKF) announced that Vunani Capital Partners sold a stake worth R42.9 million (at a price of R1.65 per share) to Force Holdings, an entity associated with the director who effectively controls the group. Force Holdings now owns 58.5% of Workforce. The current share price is R1.24, so this transaction was at a much higher price. Could more corporate activity be coming from the controlling shareholder?

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