Trencor’s decision welcomed
Company announces it will wind up Virgin Islands-registered Halco Trust
Trencor shareholders welcomed the company’s decision to remove one of the layers in the convoluted structure used to control US-listed Textainer, in which it has a 48% stake.
Almost a decade after the existence of a Liberian-governed trust was revealed to the public by shareholder activist Theo Botha, Trencor has announced it has instituted moves to wind it up.
The Halco Trust, now registered in the British Virgin Islands, holds Trencor’s 48% stake in Textainer through Halco Holdings. Last week, Trencor informed shareholders it had received a vesting and distribution from the Halco Trust of the entire issued share capital of Halco Holdings.
Trencor shareholder Chris Logan of Opportune Investments said he welcomed the decision to remove one layer in the Trencor control structure but was dismayed that they have set down a deadline of endDecember 2024 to complete this step. “This is slower than glacial,” said Logan. The pace indicated the board and executives were reluctant to make the necessary changes.
The Sens statement said Trencor had to provide an indemnity to the trustees and that indemnity would terminate on December 31 2024.
Trencor CEO Hennie van der Merwe said the indemnity was a safety measure in case of claims by possible creditors but he would not elaborate on who the creditors might be.
“For any board to make a distribution it must be comfortable about possible claims,” said Van der Merwe. He said it would probably be finalised before the December 2024 deadline.
Halco was incorporated into the Trencor-Textainer relationship in the eighties in a bid to deal with sanctions imposed on trade with SA. At the time, Trencor, a South African company, manufactured and supplied containers to Textainer in which it had a controlling stake and which was a major player in international trade.
The Trencor board has never fully explained why Halco remained in place despite the removal of sanctions over 25 years ago. Nine years ago, when details of the trust first surfaced, the board, led by the Jowell family, referred to Halco holding “trade secrets” which “provided significant trade benefits”.
Last week Van der Merwe said they had decided to unwind the trust because shareholders wanted a simpler structure. It is one step in a plan to collapse the Trencor structure, which will involve unbundling Textainer shares and getting a secondary listing for Textainer on the JSE.
Logan is hoping the restructuring will unlock value and dismantle a system that has sheltered Textainer from competition. “Textainer was powerful and profitable, now it’s struggling because management is protected behind an outdated control structure,” said Logan.