BEDFELLOWS PART WAYS
IT SEEMS that the most likely outcome of the separation by Johnnic Communications (Johncom) of its media operations and its 37,79% stake in Caxton would be for Terry Moolman’s company to buy back the shares.
That’s the view of Cadiz African Harvest fund manager Rajay Ambekar, who says that given the complicated control structure concerning the bulk of those shares it seems unlikely there would be other interested buyers.
In a move that CEO Prakash Desai says would give the market and other stakeholders in Johncom greater clarity, the company announced it would spin off its media operations into a separate listing – temporarily called OpCo – and retain its Caxton stake in the existing listed entity.
In terms of JSE requirements for a listing to control the majority of its assets, Johncom would then have 12 months in which to decide on the way forward for that stake.
The announcement comes shortly after Johncom confirmed the appointment of Desai (its former financial director) to replace former CEO Connie Molusi, who departed last year. Desai would say little more than was contained in the announcement on the Stock Exchange News Service, other than that additional announcements would be made in due course.
He says Johncom would engage with all stakeholders, look at the various options and obtain external advice before making any decisions on the Caxton stake.
Johncom is waiting for Naspers to get the green light from SA’s competition authorities to buy its 38,56% stake in MNet and SuperSport before implementing its new strategic plan. Shortly after listing OpCo, Johncom will conclude its long- awaited black economic empowerment transaction at that level.
Ambekar says the split was the right thing for management to do, given that after the sale of its M-Net stake around 40% of Johncom’s business would have consisted of an asset over which it had no control. The transaction would unlock value, Ambekar says.
He says the split would also give Johncom the opportunity to look independently at the long-term future of its lucrative printing contracts.
Johncom says its business units would include media, retail, books and maps, home entertainment, Africa, music and distribution, manufacturing and support services. Prize newspaper asset The Sunday Times recently announced it would launch a daily, The Times.