Brait should know not to keep investors in dark
Jittery Brait investors, whose shares have collapsed in value over the past two years, were given more reason to feel uneasy on Tuesday. Aside from posting a R9.7bn loss for the year to March (following a R16bn loss the previous year), the investment holding company revealed two worrying transactions.
That it did so with little transparency is even more cause for concern. Given the corporate malfeasance of recent months – and the clouds surrounding Brait’s 35% shareholder, Christo Wiese — you would think the company would have the good sense to give as much detail as possible. Leaving room for interpretation leaves people assuming the worst. And judging from the social media backlash, that is exactly what happened.
But even with more information, neither of the transactions shine a favourable light on Brait. For one, it is on the hook for R1.9bn relating to share-backed loans extended to its investment team to buy shares in the company. Brait would need to pay up if — when the loans mature in December 2020 — they are not extended, refinanced or repaid.
The second surprise comes in the almost-but-not-quite coinvestment it did with Wiese’s investment company, Titan.
Titan has since walked away from the deal, with Brait taking on debt of R1.4bn to buy as yet undisclosed listed securities. Taking out fixed debt on a floating asset is always risky, and the investment has already posted a notional loss. But it is Brait’s overall lack of disclosure that should worry investors more.
The resignation of a CEO is an unusual occurrence for a listed company. Also unusual is the resignation of the chief financial officer. So when a listed company announces the resignation of both the CEO and finance officer on the same day it is inclined to set off alarm bells.
Late on Tuesday Niveus issued a Sens statement announcing the resignations of CEO Muriel Loftie-Eaton, with effect from August 1 and chief financial officer Carolyn Kristal, with effect from July 1. No explanation was given; all that was said was that almost obligatory statement: “The board would like to thank Muriel and Carolyn for their valuable contribution to the company and wishes them well in their future endeavours.”
Niveus, which holds 100% of Vukani Gaming and Galaxy Bingo and 57% of La Concorde, is 52% held by Johnny Copelyn’s HCI. Loftie-Eaton and Kristal were also CEO and chief financial officer of La Concorde.
La Concorde was in the news recently when the high court ruled in favour of shareholder activist Albie Cilliers in his long battle to get paid out for the KWV shares he relinquished in 2016.
Yunus Shaik, a nonexecutive director of Niveus, has been appointed to take over the CEO slot from Loftie-Eaton. And Cisco Pereira has been appointed finance director with effect from July 1. Presumably shareholders, some of whom may be a little unsettled by the latest development, will be provided with some more useful details when the group’s end-September interim results are released.
To its considerable credit the HCI group has generally had a stable team of top executives. The last high-profile departure was back in October 2014 when Marcel Golding quit after he was suspended for trading in Ellies shares.