Van Rooyen’s Next move

Financial Mail - - TRUSTCO - Marc Hasen­fuss

Namib­ian in­vest­ment com­pany Trustco will again raise eye­brows in the mar­ket with a novel pro­posal to re­jig its bal­ance sheet.

This week founder, CEO and ma­jor share­holder Quin­ton van Rooyen in­di­cated a will­ing­ness to stump up as much as R1bn in loan fund­ing for Trustco, which has been rene­go­ti­at­ing its debt and was re­cently slapped with an omi­nous credit down­grade by Global Credit Rat­ings.

The much-needed fund­ing line ap­pears to hinge on Van Rooyen’s fam­ily-owned ve­hi­cle, Next In­vest­ments, sell­ing a por­tion of its Trustco shares to in­vestors, in­clud­ing in­sti­tu­tions, in­di­vid­u­als, cor­po­rates and ex­ist­ing share­hold­ers.

Aside from Van Rooyen, Trustco’s ma­jor share­holder is the Us-based Riskowitz Value Fund and a num­ber of re­lated party in­vest­ment en­ti­ties.

If the earnout clause at­tached to Trustco’s ac­qui­si­tion of di­a­mond min­ing as­sets from the Van Rooyen fam­ily pans out, the fam­ily will own more than 1.16-bil­lion

Trustco shares, which rep­re­sents a stake of 72.65%.

Of­fi­cially Trustco reck­ons that af­ter the pro­posed sale of a “rel­a­tively small por­tion” of the Van Rooyen fam­ily’s eq­uity, the fam­ily will main­tain its sig­nif­i­cant con­trol­ling in­ter­est in the group while the share float will be in­creased to the ben­e­fit of all share­hold­ers.

Sources say it will be fas­ci­nat­ing to see where Van Rooyen will place the shares, as in­sti­tu­tional in­vestors have mostly given Trustco a wide berth in re­cent years.

The big ques­tion is whether a Riskowitz-aligned en­tity — seem­ingly the only ac­tive buy­ers of Trustco stock — will ac­quire the shares be­ing ped­dled by Next.

Trustco in­di­cated that “each and any sale of any tranche of the fam­ily’s se­cu­ri­ties will be an­nounced on SENS”.

The loan, which will at­tract the prime in­ter­est rate, comes with flex­i­ble terms. Most notably, Next can elect to con­vert the loan into Trustco shares.

The stag­gered con­ver­sion op­tion sched­ule sug­gests Van Rooyen is ex­tremely bullish about Trustco’s fu­ture.

Be­tween Jan­uary 2020 and the end of March a por­tion of the loan can be con­verted at R21.49 a share based on a max­i­mum is­sue of 46.5-mil­lion Trustco shares.

The fol­low­ing years en­vis­age con­ver­sions at a rate of R31.91 a share, R42.72 a share, R57.93 a share and R74.79 a share.

Trustco’s share price re­cently peaked at R13.49 on the JSE.

Rus­sell Roberts

Quin­ton van Rooyen: Seems ex­tremely bullish about Trustco’s fu­ture

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