A bit of loose change

Financial Mail - - DIAMONDS & DOGS -

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.

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