Tiso Blackstar stock in 70% annual decline

MEDIA investment firm Tiso Blackstar’s shares plummeted 20 percent to R2.54 earlier this week.

A year ago Tiso traded at R9.50, but has since fallen 70 percent and slashed the company’s total market capitalisation to R762 million from R2.3 billion last December. Yesterday the company closed 8.66 percent higher on the JSE at R2.76. Tiso achieved an all-time high three years ago when it traded at R14.85 a share in April 2015 after having listed on the JSE in 2011.

Early this year analysts raised concerns after the group cancelled the primary listing of its shares on the Alternative Investment Market (AIM) on the London Stock Exchange “in an effort to trim its costs”. When that announcement was made public, Tiso’s fell 53 percent year-on-year.

Yet despite the performance, chief executive Andrew Bonamour still takes home a salary of R20m. He told the market in March 2017 that the sale of its 22.9 percent interests in Kagiso Tiso Holdings (KTH) was expected to close during May 2017 for R1.5bn.

However, the stock fell after the transaction fell through, with the expected proceeds of R1bn boost failing to lift its balance sheet, leaving it with a R924m bank overdraft and current borrowings of R502m to service.

In 2007 Mvelaphanda paid R49 a share for a 25.5 percent stake in Avusa (then Times Media Group, TMG).

A large portion of those shares were sold for R24 a share in the 2012 Blackstar-backed restructuring of Avusa into TMG.

Tiso acquired TMG, which has been listed for a long time and the share price traded above R48 a share for TMG. However, in 2008 the share price declined to R22.50 a share.

The exposure of the Public Investment Corporation (PIC) to Tiso through a direct shareholding and indirectly in Kagiso asset management amounts to billions.

The PIC had a 20 percent direct stake and a further 10 to 15 percent in the TMG. With 300 million shares at R22.50 a share in 2008 this equated to nearly R7bn. With the current market cap the PIC lost 30 percent of its investment after losing R4bn in 2004 when the shares traded at R48.

Analysts say the delisting from AIM has led to negative perceptions and put the business under financial strain. “The fact that the Tiso group has tried unsuccessfully to sell its 22.9 percent stake in KTH, a non-core business, with little success in the last few months, added to market questioning the future of Tiso”, a source said.