Why isn’t Steinhoff worthless yet?

There’s more bad news for shareholders

It really is beyond me why Steinhoff isn’t trading at zero. The creditors are essentially in the process of getting the keys to the castle, with shareholders likely to hold unlisted instruments as a best-case outcome. Yet, it’s trading at R0.53 per share, which is precisely 53 cents more than I would pay for it.

To reinforce my view that this is a donut (i.e. worthless), the latest news is that Steinhoff portfolio company Mattress Firm is no longer going to list in the US. It has withdrawn its registration statement with the US Securities and Exchange Commission (SEC), citing ongoing volatility in the IPO market.

As evidenced by layoffs at Goldman Sachs, this isn’t the time to be listing in the US market (or anywhere else, really).

It hardly matters, as the creditors will be patient and will wait for the next cycle. The brave few who plan to hold unlisted shares will be following the same thesis. The difference is that the creditors get to eat dinner first, with the shareholders lucky to get crumbs that fall off the table.

Tharisa was on the wrong side of the weather

“Unprecedented rainfall” (an annualised increase of 27%) has impacted production

In a quarterly production report dealing with the three months to December, Tharisa took a knock to both PGM and chrome output. There’s still plenty of cash on the balance sheet (net cash of over $101 million), so this was just a bump in the road.

There is some good news, like production guidance surprisingly being maintained for both PGMs and chrome. The other good news is that PGM and chrome prices have been holding up, which is obviously critical for miners.

The Vulcan Plant is on track for increased production and ground has been broken at the Karo Platinum Mine in Zimbabwe, after $31.8 million was raised for the project on the Victoria Falls Stock Exchange. And there you were, thinking that the Cape Town Stock Exchange is the most exotic place to raise capital. Trust me, there are many exchanges out there.

Drilling down into the numbers, quarter-on-quarter production fell 5.7% for 6E PGMs and 8.0% for chrome concentrates. Prices for the PGM basket and metallurgical grade chrome fell by 1.7% and 1.3% respectively on a quarter-on-quarter basis (i.e. vs. the three months ended September 2022).

Telkom and Rain have terminated discussions

Will Telkom ever find someone to dance with?

If you miss the existence of Ratanga Junction or the thrill of going to Gold Reef City in your holidays, you could always buy shares in Telkom. Take a look at this wild ride over the past year:

First, MTN was sniffing around a deal with Telkom. That eventually fell over, leaving space for Rain to get involved and irritate the Takeover Regulation Panel (TRP) in the process with poor behaviour. Having clearly hired better lawyers, things went quiet for a while.

After initial discussions but prior to any due diligence work, the parties decided to walk away from a potential deal at the moment. No further details were given.

The market seemed to like this, sending Telkom 9.3% higher on the day. With two major potential parties having walked away (for now at least), Telkom needs to find another potential way to unlock value.

Little Bites:

• Director dealings:
  • Following the rights issue by York Timber, Peresec Prime Brokers now holds a 29.28% interest in the company. The value unlock story continues…in theory.
  • A director of Argent Industrial has sold shares worth R190k – it’s always dangerous to read too much into these trades, but load shedding must be biting these companies.

• For those suffering from a December hangover and related memory loss, Impala Platinum released an announcement reminding the market that the only remaining condition precedent to the offer for Royal Bafokeng Platinum is the Takeover Regulation Panel (TRP) Compliance Certificate. Implats is still fighting with Northam Platinum at the TRP, helping several legal teams afford better holidays this year.

• Labat Africa has issued more shares, this time a tranche representing 3.33% of shares in issue when the general authority to issue shares was granted. The funds are being used to expand the cannabis healthcare business and for general working capital purposes.

• Having now appointed a Nominated Adviser (NOMAD), Kibo Energy has resumed trading on the AIM market in London.