Empowerment deal un­rav­els

Am­bit set for court bat­tle with (for­mer) empowerment part­ner Cape Empowerment Trust

Finweek English Edition - - Portfolio Punts - »

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

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