A rock and a hard place

Financial Mail - - DIAMONDS & DOGS BY JAMIE CARR -

One po­ten­tial prob­lem with be­ing a listed com­pany is that you keep on hav­ing to go back to the mar­ket to tell ev­ery­body what’s been go­ing on. It’s like an end­less suc­ces­sion of end-of-term re­ports, which are fine for the brighteyed en­thu­si­asts at the front of the class, but less en­joy­able for those who spend most of their time con­fined to the cor­ner sport­ing the dunce’s cap.

At least if you’re a pri­vate com­pany you can just re­port to a cou­ple of share­hold­ers rather than have the whole JSE blow rasp­ber­ries in your di­rec­tion.

The big is­sue is that if you keep on dis­ap­point­ing the mar­ket, your cred­i­bil­ity goes straight to zero, no­body will touch your shares, and very soon your mar­ket cap will have shrunk to a level at which you’re to­tally un­in­vestable.

Rock­well’s mar­ket cap is down to R22m, its share price hav­ing dropped more than 90% from its peak three years be­fore it was sus­pended ear­lier this year. It has man­aged to re­cover a few de­cent-sized stones, but it’s nowhere near break­ing even, los­ing US$2.7M in the first quar­ter.

The com­pany has three sub­sidiaries in busi­ness res­cue, and the hope is that the busi­ness res­cue prac­ti­tion­ers will work along­side man­age­ment to re­turn them to sol­vency and al­low the com­pany to ramp up pro­duc­tion to get back to break-even and be­yond.

There must be a feel­ing that Rock­well’s not go­ing to be al­lowed many more chances; that it had bet­ter ex­e­cute its turn­around plan and re­turn to pro­duc­tiv­ity, or it’s go­ing to be time to turn out the lights.

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