of delistings trend?
THE CONTROLLING SHAREHOLDER of Venter Leisure & Commercial Trailers (Ventel) has proposed buying out minority shareholders at 30c/share and delisting the company from the JSE. A Sens announcement on Monday, 27 October said Ventel felt the scale of its business (annual turnover: R50m) doesn’t justify a listing. “The board feels that the company should de-list from the JSE in order to conserve its limited funds to grow the business.” Ventel was listed on the JSE in 1992.
Dunrose Investments 143 – the nominee company representing the Hamann family – already owns 80% of Ventel and will only have to fork out around R3m to take out minority shareholders. The offer price of 30c is well above its last traded price of 23c/share for Ventel – but it went as high as 55c/share on the JSE last year.
While Ventel isn’t exactly rolling in free cash (in fact, the Hamann family has funded the business for the past few years) the group has earned R6m from the sale of its axle-making subsidiary, Rubax. Ventel’s net tangible asset value grows from 27c to 36c/share after the proceeds of the Rubax sale are finalised.
While the Hamann family’s buyout offer is effectively being pitched below intrinsic NAV, we doubt too many minority shareholders will be putting up resistance. Ventel, while in much better shape under the control of the Hamanns, seems unlikely to make acquisitions or pay dividends due to relatively high debt levels.
While the delisting of Ventel – which suffers from a serious lack of trading on the JSE – is an understandable development, pundits may wonder how many other companies are considering similar moves in light of prevailing market conditions.
With many small cap shares trading below intrinsic NAV or fair value, there must be a temptation for directors and majority shareholders to pitch cheeky buyout offers to minority shareholders. Could Ventel be the first of many tilts at delisting by small cap companies on the JSE?