Sovereign Foods set to bow out on high note
It looks as though Sovereign Foods will go out on a high note. Shareholders attending Monday’s meeting voted overwhelmingly in favour of the two resolutions needed to implement the Capitalworks offer and delist the share. More than 90% of shareholders attended the meeting and all of them voted in support of the first resolution.
The second resolution, which related to the proposed termination of the listing, was not as popular. A little more than 34% of shareholders abstained from the vote and 54% of shareholders voted in support, so the share’s set to exit the JSE midway through November.
Given the figures involved it’s safe to assume that Country Bird Holdings (CBH), which acquired 34% in 2016, was behind the abstainers. CBH did indicate it would accept the R12 a share offer from Capitalworks as it was unhappy about remaining as a significant shareholder in an unlisted entity. This means CBH is set to make a reasonably easy R3 a share profit (before expenses) on its bid for Sovereign.
Some minority shareholders have indicated that they will remain on in the unlisted entity. They’ve been encouraged by the recent signs of general improvement in the industry as well as indications of specific improvement at Sovereign as it develops its niche markets.
Most are likely to take their money and go. Perhaps they will give a nod of thanks to CBH for ensuring they got such an attractive price.
With Sovereign’s fate secured, there’s now talk of CBH perhaps turning its sights on RCL’s chicken business. It’s probably much too early for CBH to even think of getting back in the ring, but it is about time Remgro did something about RCL’s underperforming chicken business. Despite return on equity being dismal, the management is rewarded with extremely generous remuneration packages annually.
The story of property syndication scheme Sharemax is a long and sorry one. In short: thousands of pensioners lost more than R4bn on failed property developments.
Fast forward seven years since the scheme imploded, and Nova Property Group was established to pick up the pieces, and a JSE listing of the old Sharemax property portfolio is on the cards.
Much fuss has been made, and rightly so, over the fact that Nova’s seven directors will receive 43% of the listed entity, which stake has a notional value of about R 946m. The fuss is over the fact that when Nova was born to manage Sharemax properties and avoid liquidation, the directors received about 97% of Nova’s shares free, because most investors elected to take up debentures, effectively debt instruments, rather than shares in Nova.
Nova directors will tell you that, at the time, the shares were worth nothing and that they, through blood, sweat and tears, have created the value that exists today. Still, it is handy reward for their toil.
What undoubtedly matters more to Nova’s debenture holders than the directors’ free shares is whether they stand to get their money back. In this regard, a listing, as one commentator put it, is “the best of the worst options”.
While this is not exactly the best economic environment in which to be listing a South African-focused property fund, a listing should, if nothing else, offer the 20,000-odd mostly elderly investors an exit. One can only hope, for their sake, that it is at a fair price.