Shares rally on Taste’s new board

Retail franchiser Taste Holdings announced new appointees and chairmen of the subcommittees, in a bid to breathe life into the cash-strapped company.

Retail franchiser Taste Holdings announced new appointees and chairmen of the subcommittees, in a bid to breathe life into the cash-strapped company.

Shareholders responded positively to the news, with the share price rallying more than 5% before closing 1.41% higher at 75c. The new independent nonexecutive directors are Leo Chou, Neil Brimacombe, Zukie Siyotula, Adrian Maizey and Grant Pattison.

Analyst at Vunani Securities Anthony Clark said the move was understandable, given that the replacements came with experience in the fast-moving consumer goods sector.

Clark said that two of the appointments were as a direct result of the recent rights offer that saw the Riskovitz Value Fund (RVF) taking up more than 60% of the company. He said the company wanted to have representation on the board that would look after its investment.

“They’re kicking out those without any real knowledge on [fast-moving consumer goods] and putting in seasoned veterans,” Clark said.

“After paying the amount they did in the rights offer they damn well want people who will look after their interests.”

The fast food retailer recently raised R398m through a rights offer, a large portion of which would be used to settle its term debt of R273m.

The capital raised “achieves the stated goal of restructuring the balance sheet, materially degearing the business and providing capital for the continued expansion of the group,” said Taste CEO Carlo Gonzaga.

The latest rights issue was Taste’s last resort to free up cash after it failed to sell its luxury jewellery business, comprising Arthur Kaplan, World’s Finest Watches and NWJ, in which the proceeds would fund the Starbucks and Domino’s expansion.

Clark said, with only 13.84% of the R398m rights taken up by minorities, RVF obviously saw value in Taste when nobody else had in several rights offers.

After the rights offer, RVF increased its stake in Taste to 61.8%, from 38.3%.

Taste’s nonexecutive directors including founding independent nonexecutive director Kevin Utian, Wessel van der Merwe, Hylton Rabinowitz and Tony Berman, resigned from the board with immediate effect.

Wayne McCurrie, the senior portfolio manager at Ashburton Investments, said the company had a tough time over the past two years under the previous board’s curatorship. “The share price tells us that they haven’t done a good job,” he said.

Its share price ended 2017 down 65.64%.