Imperial tidying up its business
Imperial Holdings will fork out about R388m to buy back more than 4.5 million preference shares as it tidies up the business ahead of an unbundling of its vehicle businesses into separately listed Motus Holdings.
Imperial Holdings will fork out just more than R388m to buy back more than 4.5 million preference shares as it tidies up the business ahead of a planned unbundling of its vehicle businesses into separately listed Motus Holdings.
Preference shares were in vogue for a time among JSElisted companies, but have since fallen out of favour with the general market, particularly as they are often illiquid and trade at a discount to their net worth. They behave like shares in that their prices can grow over time as they are traded, but are also similar to debt as they pay investors fixed returns in the form of dividends.
Imperial issued its preference shares in 2011, but stopped as “there were simply more attractive funding options available”, according to the company.
In announcing the buyback, Imperial said on Monday that it would help simplify its capital structure ahead of the separation of its businesses into vehicles and logistics, as well as allow its preference shareholders to sell their stock “in an orderly and effective manner”.
Those holders will be bought out at R83 a share — a premium of 29% to Friday’s closing price of R64.29, and an 18% premium to their 30-day average up to August 10.
Imperial’s preference shareholders will also be paid out a dividend of R2.53 for the period from June to October 15 when the shares are delisted, and a R4.17 dividend that had accrued for the period between December 2017 and June 25 2018.
Imperial said it had engaged with its key preference shareholders on the buyback, but a majority of both preference and ordinary shareholders will have to vote on the scheme of arrangement for it to pass, and the company expects to post a circular with the details on Friday September 14.
The split of Imperial into Motus and logistics began with former CEO Mark Lamberti, and will mark the end of the company as investors have known it.