EnX loses out on a big deal at a bad time

There is no good time to call off an important debtculling deal. But it’s probably doubly bad to lose a chance to raise much-needed capital when the market for small-cap shares is plagued with paranoid sentiment.

Industrial equipment and services group enX, which had to abandon the sale of its fleet management solutions operations to Bidvest, is now trading at levels that are less than half the share price at the time the mooted transaction was announced.

Reading between the lines, it seems enX was keen to keep the deal on the table; Bidvest perhaps less so.

EnX’s sale of its EFML segment would have raised nearly R1.3bn — a figure that dwarfs the group’s market value of R728m.

But it’s worth remembering that Bidvest would have refinanced EFML’s interest-bearing debt of about R1.8bn, which effectively gave the transaction an enterprise value of R3bn.

The enX share price suggests some difficulty in finding another buyer for the EFML operations at anything near the same terms as proposed by Bidvest.

These are solid enough assets in “normal” times — providing a full fleet management solution for passenger and commercial vehicles.

In terms of balance sheet, enX will need to grind through a tough period. It is engaging with lenders to refinance the bank facilities of the local leasing businesses. Last month enX’s R225m ENX04 note was extended by two years and this week a R160m 13-month reinvestment (from the maturing ENX05 notes) took place.

The group also gave the assurance that cash resources from a drawdown of liquidity lines remained healthy, and, perhaps more importantly, debtors’ collections had been steady.

EBRAHIM PATEL

Stationed at the department of economic development for several years, the public at large has little intimate knowledge of what trade & industry minister Ebrahim Patel is like. Until now.

Patel has long had a reputation as a stickler for detail with a great fondness for a good PowerPoint presentation, who hardly sleeps and expects his staff to do the same.

The latter is probably why his previous department always suffered with high vacancy rates. Even so, Patel ran that department, at least administratively, very well. Still, it had little prominence and most people never really understood what it actually did.

For a year now, the department has been merged with trade & industry, with Patel deposited at the head. As the government seeks to balance the need to reopen the economy and save lives, the department has become critical in managing the Covid-19 lockdown.

But South Africans have grown increasingly frustrated with complex and sometimes senseless regulations imposed. Under level 4 of the lockdown, consumers can order takeout, but grocery stores may not sell hot food. One can buy children’s clothes, but not underwear.

As if the regulations were not sprawling and confusing enough, the signature micromanagement of Patel is clearly irritating consumers.

Not everyone is a big-picture kind of guy — certainly Patel is not — but micromanaging the situation to death does not make good leadership.