Empowerment deal unravels
Ambit set for court battle with (former) empowerment partner Cape Empowerment Trust
THE TOUGH TIMES brought about by South Africa’s high interest rates have claimed the life of another black economic empowerment transaction. Property loan stock company Ambit Properties’ deal with Cape Empowerment Trust (CET) has crumbled after the latter unilaterally disposed of its entire stake to ApexHi Properties. The initial deal was concluded late last year.
As extensively covered on our website Fin24.com, CET had been pressured by high debt levels and therefore forced to raise money. It contemplated selling off its holding in Grand Parade Investments (GPI) but GPI’s current share price made that uneconomical. At around the 320c/share range that GPI was trading at the time of CET’s announcement, CET would have realised at least a nearly 30% loss on its GPI acquisition price. Not only had CET paid an average 460c/share for GPI – it had fought long, hard and expensive battles for years with other influential GPI shareholders to gain those shares. The share drifted down further to its current 230c, widening the potential loss to between 40% and 50%.
It was at that stage that it suddenly found a buyer for its 110m units in Ambit, held via the wholly owned Business Venture
“Entitled to sell”. Shaun Rai