A bit of loose change

Less than five years ago, the punters were buying and selling Aveng somewhere just north of R30 a share. At its current level of 4c, it’s not too hard to work out who was on each side of the transaction, as the sellers will currently be lighting votive candles and sacrificing fatted calves to as many deities as they can think of, while the buyers will be shovelling the share certificates into the “information to be concealed from the spouse at all costs” file and hoping the rest of the portfolio has outperformed.

It is unusual, to say the least, to see a company with revenues of more than R30bn be valued by the market at a bit of loose change above R200m, and that valuation speaks loudly of where the market thinks this sorry saga is going to end up.

The company talks of realising a year ago that it was facing a perfect storm of disappearing demand in most of its sectors, operational underperformance, significant ongoing losses and limited cash-flow generation, as well as impairments of uncertified revenue claims.

After a night of the long knives in the executive suite, an extensive strategic review was undertaken to find a future for the group, revolving around securing a sustainable capital structure, flogging the albatrosses and unlocking value from any decent businesses that were left. The balance sheet has been strengthened to the extent that directors believe it’s still a going concern, and now the sale of noncore assets is the next step to be completed, while Mcconnell Dowell and Moolmans find themselves carrying the flag for the future.