Blue Label sinks to record low
The share price of Blue Label, the largest shareholder of Cell C, fell to a record low on Tuesday after the JSE said it was facing suspension for failing to deliver its financial results. /
The share price of Blue Label, the largest shareholder of Cell C, fell to a record low on Tuesday after the JSE said it was facing suspension for failing to deliver its financial results.
The JSE said on Tuesday that Blue Label had until the end of September to release its results for the year ended May, in order to comply with its three-month posting requirement.
Blue Label, however, issued a statement reiterating that its results would be released on September 26.
Avior Capital Markets analyst Ruhan du Plessis said the move by the JSE is standard practice for companies that do not release results within three months of their financial year end. But it could become a big issue for shareholders unable to trade the shares on suspension.
John Burke, director of issuer regulation at the JSE, said an organisation that reaches this point will have its listing annotated with an “RE ” on the bourse ’ s trading system to indicate that it has failed to submit its interim or provisional financial report on time.
If Blue Label fails to release its results by month end, it risks having its listing suspended on the local bourse, the JSE said.
If that happens, Burke said, the suspension will only be lifted when the JSE receives the company ’ s financial report.
The exchange will also need to be satisfied that the financial report “complies with IFRS and the Saica financial reporting guides as issued by the accounting practices committee and financial pronouncements as issued by the Financial Reporting Standards Council,” Burke said.
During early trade, Blue Label ’ s share price was 6.94% down at R2.68, the lowest since listing. But it pared its losses and closed 0.35% down at R2.87.
The company ’ s share price has fallen by about 47% so far in 2019, which follows a 63.74% loss in 2018.
Blue Label said earlier in August that it was in the process of determining the value of its investment in Cell C, of which it holds 45%.
Cell C, which has struggled to make consistent profits since it became SA ’ s third mobile operator in 2001, is grappling with a hefty debt burden.
In August S&P Global Ratings downgraded Cell C ’ s debt to D, or “default ”, its lowest possible junk rating. This came after the cellphone operator “failed to make interest payments on certain bilateral loan facilities ”.
“We believe there is an increased likelihood that Cell C will be unable to repay all or substantially all of the obligations as they come due, unless it is able to restructure its debt and recapitalise its balance sheet,” the ratings agency said at the time.