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The Ascendis story takes another turn (JSE: ASC)

The latest SENS announcement raises more questions than answers

It seems as though Ascendis is now taking a piecemeal approach with its communications around the various allegations being thrown at the company on social media – and specifically Twitter/X, which is where all the action is when it comes to markets.

The first announcement this week was an acknowledgement that the circular is missing information and the meeting needs to be postponed. There’s no excuse for not disclosing this stuff properly, particularly in such a highly regulated environment. All this has done is put more steam behind the allegations.

The second announcement is a lot weirder, with the independent board stating that the presentation doing the rounds on social media isn’t a company document, has never been presented to the board and hasn’t been sanctioned by the board either. To add to the fun, the announcement also claims that the presentation has numerous factual inaccuracies.

Now, this is where things get really tricky for me.

Carl Neethling is the CEO of Ascendis, but has also spearheaded the proposed take-private. This puts him in a very tricky position, as he would presumably need to demonstrate that the best possible future for the company is one in which he takes it private with a consortium. For this to be true, there must (1) be no better alternative to going private and (2) the consortium must be the best bidder in town.

A lot of the social media stuff focuses on how the consortium is getting the shares for a bargain, profiting for themselves in the process. Look, I don’t know where some people have been all these years, but that’s how capitalism works. No take-private in history would’ve been completed unless the buyer thinks the price is appealing! Similarly, the sellers must be willing to accept the price, which they would only do in the absence of something better. I must also point out that nobody on social media is highlighting that this is an offer, not a scheme of arrangement. This means that shareholders can elect to retain their shares, provided they are willing to hold unlisted shares.

There are many other relevant questions that will likely add to the regulatory precedent in our market. For example, should the independent expert consider the offer based on the company’s existing reasonable prospects, or the value that the buyers will bring to the deal? In my view, it can only be the former. Ideas are easy and execution is hard.

When it comes to the presentation that is now the subject of a SENS announcement, I must point out that the independent board usually wouldn’t be privy to the documents that the consortium is using to raise funds. Unless I’m terribly mistaken, it has nothing to do with them whatsoever. The waters are muddied here because of Neethling’s position as CEO, which takes us back to the crux of the issue in my opinion: what was for the board and what was for the consortium? Most importantly, how has the conflict of interest been managed?

This story is going to be in the headlines for several months and is going to be absolutely fascinating in terms of how regulations are applied. Stay tuned!

Fortress gets strong approval for the plan to solve the share structure (JSE: FFA | JSE: FFB)

The dual share class structure of Fortress will soon be a thing of the past

If you’ve been following the Fortress story in recent times, you’ll know that the company holds the dubious honour of being the first Real Estate Investment Trust (REIT) to have lost that status on the JSE due to non-compliance with dividend distribution rules. This was caused by the dual-share class structure that effectively left the group hamstrung because the rules for distributions had never contemplated a downturn like we saw in the pandemic.

After attempts to find a solution with shareholders backfired, the company eventually threw in the REIT towel. It was a bit like the Y2K scare going into the year 2000. Nobody was quite sure what would blow up, and then nothing blew up.

Still, Fortress needed to sort it out and the recently proposed scheme has found support among shareholders. It cleverly uses NEPI Rockcastle shares to pay off the Fortress B shareholders, leaving only the Fortress A shares in issue (and a smaller stake in NEPI Rockcastle).

At the meeting to approve the scheme, it was given a resounding approval by both classes of shareholders.

Novus has been busy with share buybacks (JSE: NVS)

And there are many more to come

Since August 2023, Novus has managed to repurchases shares representing around 3% of total issued share capital. This comes to a total investment in its own shares of R45.5 million.

Importantly, the average price paid for share was R4.36 and the current share price is R4.51.

Under the general authority given at the last AGM, Novus can still repurchase another 16.99% of the shares that were in issue on the date of the authority. Of course, this doesn’t mean that the company will make those repurchases. The board must always consider the solvency and liquidity of the company when executing share buybacks, so it is common on the JSE to see buyback authorities from shareholders not being fully utilised.

Little Bites:

• Director dealings:
  • Invicta Holdings (JSE: IVT) CEO Steven Joffe has turned the wick up on his purchases of shares alongside Dr. Christo Wiese. The two have each bought another R3.68 million worth of shares in the company.
  • A prescribed officer of Spear REIT (JSE: SEA) has sold shares worth R420k.
  • At a time when Kibo Energy (JSE: KBO) is already a source of major jitters for shareholders, the COO has sold shares in the company for R100k. That doesn’t send a great signal when the company is trading at one cent a share – literally the lowest price possible.

• The group financial director of Sebata Holdings (JSE: SEB) has resigned with immediate effect. The current CEO will take over that role as well.

• The mandatory offer period has closed for Brikor (JSE: BIK), with the offer having been triggered by Nickel Trading moving through the statutory threshold of 35%. Nikkel holds much more than that in practice, as they triggered the offer through a deal that got them to over 68% of the shares in issue! The TRP has issued a compliance certificate for the mandatory offer.