Ghost Bites (Kibo Energy | Life Healthcare | Lighthouse | Telkom | Texton)

Kibo is still chasing the joint venture money (JSE: KBO)

The excuses from the joint venture partner are just embarrassing now

I feel for Kibo Energy in this situation. The company isn’t exactly hot property right now, so opportunities to raise capital (either at listed or subsidiary level) are few and far between. When they do come up, one hopes that the counterparty acts properly and professionally. Sadly, that really isn’t turning out to be the case for Mast Energy Developments (MED), the subsidiary of Kibo that is trying to put together a joint venture.

The partner is Proventure Holdings. It’s not a great sign that I can’t get onto their website because their security certificate has expired. It’s also not a great sign that the payment for the joint venture still hasn’t happened, despite several extensions and promises.

The latest excuse? “A lack of coordination and administrative difficulties on the side of Proventure over the festive period” – do me a favour.

What kind of joint venture partner can’t make a payment over the festive period after agreeing to that deadline?

The CEO of Proventure is supposedly travelling to London soon to finalise the deal. It’s not impossible that Proventure will attempt some last-minute changes to the deal. After all, what other reason can there be for non-payment and a meeting in London? Messy stuff.

Life Healthcare meets all conditions to sell Alliance Medical Group (JSE: LHC)

The transaction is expected to conclude at the end of January 2024

A deal is never done until all the conditions are met and the money is in the bank. It’s rare, but theoretically any deal can fall over until that point. This is why shareholders (and the advisors getting paid a success fee) breathe a large collective sigh of relief when a transaction becomes “unconditional” in accordance with its terms – in other words, when all conditions have been met.

Although the disposal by Life Healthcare of Alliance Medical Group is expected to close by the end of this month, investors will have to be patient for a special dividend. Offshore debt must be repaid, transaction costs must be settled and Life also wants to hang onto some of the proceeds for general corporate growth purposes.

The “majority of the net proceeds” will be returned to shareholders, but at this stage we don’t know exactly how much or when this will happen.

Lighthouse sells another big chunk of Hammerson (JSE: LTE | JSE: HMN)

The capital will be redeployed into direct property opportunities

The market doesn’t have much love for investment structures that see listed companies holding shares in other listed companies. This inevitably leads to higher discounts to net asset value (NAV) per share, as investors (quite rightly) don’t see the point of incurring the costs of the Lighthouse structure in the middle when they can hold Hammerson directly.

I therefore see it as a positive that Lighthouse has sold off R651 million worth of shares in Hammerson. The proceeds will be used to pursue yield-accretive direct property opportunities. Direct opportunities are what investors are looking for, as they can’t access those opportunities themselves.

Telkom one step closer to perhaps selling Swiftnet (JSE: TKG)

There’s a renewed cautionary and a further milestone that has been reached

Back in November 2023, Telkom told the market that it was in exclusive negotiations with a B-BBEE consortium regarding the potential sale of Swiftnet. This masts and towers business has been for sale for quite some time and it would help Telkom greatly to get the deal done.

Although nothing at this stage is remotely certain, it is good news that the potential buyer has completed its confirmatory due diligence. Although the announcement doesn’t say it, this suggests that the parties will now try to firm up the commercial terms before a firm deal is announced.

Again, there’s every chance that absolutely nothing happens here, so don’t get ahead of yourself.

Texton closes its rights offer (JSE: TEX)

The underwriters didn’t get much in the end

The structure of the recent Texton rights offer made it incredibly punitive for shareholders not to follow their rights. Some investors dug out their last coins between the couch pillows to make sure they didn’t get painfully diluted, with 94% of shareholders following their rights. This left only 6% of the issued shares for the underwriters.

We need to dig deeper though, as the shares are tightly held by insiders and these are (quite rightly) shown as existing shareholders. Of the 36,378,030 shares subscribed for by existing shareholders, a whopping 34,796,946 went to three directors.

The uptake among external shareholders was nowhere near 94%, that’s for sure.

Little Bites:

• Director dealings:
  • An associate of a director of Huge Group (JSE: HUG) has bought shares worth just over R1k. If the associate in question wasn’t a hedge fund, I would make jokes about Janu-worry budgets for buying shares!

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