Texton Property’s woes continue
Pressure mounts on property fund’s share price after failure to complete Equites portfolio deal could now lead to a damages claim
Texton Property Fund’s woes continue with the JSE-listed company now possibly facing legal action after an acquisition that would have seen it buy a portfolio of logistics assets fell through.
Texton Property Fund’s woes continue, with the JSE-listed company now possibly facing legal action after the acquisition of a portfolio of logistics assets fell through.
Texton, which owns assets worth about R5.4bn in the UK and SA, announced on Thursday that it had failed to complete the legal paperwork required for a deal with Equites Property Fund to take place. This has put more pressure on Texton’s struggling share price, which fell 1.75% to R4.50 on Thursday. The downward trend continued on Friday, with the share losing 2.22% to R4.40. The company announced on May 21 that it would acquire the logistics assets from industrial specialist Equites. “Shareholders are advised that the acquisition agreements have been terminated by Equites due to Texton being unable to perform under the acquisition agreements,” Texton said late on Thursday. Andrea Taverna-Turisan, the Equites CEO, said his fund would seek damages if it was unable to collect a similar price for the portfolio agreed to with Texton. “We are disappointed as we have been messed around for nearly half a year. We gave them a couple of extensions and they wanted another one. If we fail to get the price in the market that Texton had agreed to pay, we will seek damages,” said Taverna-Turisan.
Texton has been trying to regain the confidence of investors, having undergone numerous executive changes since its formation at the end of 2013. It has had four CEOS since then. Interim CEO Marius Muller told Business Day that Texton was unable to complete the deal because the Public Investment Corporation (PIC) had exercised a put option and as a result Texton had to buy back its own shares from the BEE consortium known as Texton Broad-Based Empowerment, which had been loaned money by the PIC. This still needs to be put to a shareholder vote. The PIC loaned Texton Broad-Based Empowerment money to acquire 13.8% of Texton some years ago. The PIC decided to exercise the put option after a share cover ratio was breached and Texton’s share price fell below a strike price of R11.20.
“The notice of the exercise of the PIC put option was received on August 22 2018, a week-anda-half before Texton’s results were due for release, with the final exercise letter being received on September 11 2018. Texton was unable to perform, given the uncertainty regarding the PIC put option and its impact on Texton’s financial ratios.
“We are communicating with the PIC and our shareholders and have prioritised taking the matter to shareholder vote, as required,” he said. Muller did not anticipate legal action following the failed deal. He said Texton would be able to find assets of a similar quality. Chief investment officer at Bridge Fund Managers Ian Anderson said Texton had lost focus since its first CEO, Rob Kane, left in 2014.
“We disposed of our investment in Texton some time back because of the company’s evershifting strategy. The original strategy under CEO Rob Kane was focused, but after he left there has been very little focus at the company. The foray into the UK has not been successful and the local portfolio is now also under pressure,” he said.
DAMAGES CASE POSSIBLE AFTER TEXTON FAILS TO COMPLETE PURCHASE OF EQUITES PORTFOLIO