No fes­tive raids

But plenty ac­tiv­ity on the fringes over Christ­mas break

Finweek English Edition - - INSIGHT - MARC HASEN­FUSS marc.hasen­fuss@fin­

THE CON­TENTION that the lull in the mar­kets over Christ­mas pro­vides an op­por­tu­nity for au­da­cious raiders to scut­tle a vul­ner­a­ble cor­po­rate hardly holds wa­ter these days. Ever since the early Nineties – when Per­skor was raided by the bril­liant Man­nie Sim­chowitz – we haven’t seen too many dar­ing as­saults on com­pa­nies listed on the JSE.

Those who kept a lonely vigil (again) this year were re­warded with at least some in­trigu­ing cor­po­rate ac­tiv­ity over the fes­tive sea­son – and a num­ber of trans­ac­tions worth record­ing. Ar­guably the most in­ter­est­ing in­volved for­eign preda­tors hunt­ing down South African com­mod­ity as­sets. In the first in­stance there was a pro­posal from AIM-listed ju­nior min­ing group Maghreb Min­er­als to buy out the mi­nor­ity share­hold­ers in lo­cal fluorspar dog Sal­lies.

It seems the BSD (big swinging dick) be­hind the trans­ac­tion is United States­based spe­cial­ist in­vestor Fire­bird, which – as far as Fin­week can as­cer­tain – is a ma­jor share­holder in both Sal­lies and Maghreb. It seems the ploy is to con­vince South African share­hold­ers to switch their hold­ings in Sal­lies for shares in Maghreb (which is cur­rently buy­ing up other fluorspar as­sets).

An­other in­ter­est­ing trans­ac­tion – and one that failed to catch the eye of the main­stream me­dia – was the buy­out of­fer for Rare Earth Ex­trac­tion Com­pany (Rareco) by Cana­dian miner Great Western Min­er­als Group. The cu­ri­ous as­pect of this deal is that Rareco was sus­pended on the JSE (and its list­ing sub­se­quently ter­mi­nated) in 2002 and even the most op­ti­mistic share­holder wouldn’t have been in­clined to give the ven­ture a smidgen of value. Yet share­hold­ers now face the prospect of a 300c/ share of­fer, a pro­posal that val­ues Rareco at a rather nifty R150m. In­ci­den­tally, the 300c/share of­fer is higher than Rareco’s share price ever traded on the JSE – a brief ten­ure that in­cluded spells when the share traded as low as 5c.

For the record, Rareco owns a rare earth min­ing de­posit at Steenkamp­skraal near Van­rhyns­dorp. The com­pany’s “big moment” came in the late Nineties, when it se­cured an agree­ment to sup­ply feldspar to glass gi­ant Con­sol. How­ever, Con­sol wasn’t happy with the qual­ity of the ini­tial batches. The ar­range­ment was called off and Rareco slunk into ob­scu­rity.

While Rareco share­hold­ers have been urged to ac­cept the GWMG of­fer, some may pause to con­sider the com­pany’s real po­ten­tial. Af­ter all, GWMG ear­lier last year was happy to pump new cap­i­tal into Rareco af­ter sub­scrib­ing for 10m new Rareco shares – which se­cured a 20,8% stake in the com­pany.

In what’s be­com­ing an all-too-com­mon sight among re­cently listed small caps, Rare Hold­ings – a pip­ing spe­cial­ist – opted to is­sue new shares to raise cash of R40m. The com­pany noted rather omi­nously the ur­gent need for fur­ther work­ing cap­i­tal fund­ing, with pres­sure on its day-to-day busi­ness ac­tiv­i­ties. Ini­tially 100m shares will be is­sued to in­vest­ment com­pany Stafric at 40c/share, but to tide Rare through its tough patch a loan has al­ready been se­cured from May­fair Spec­u­la­tors. May­fair Spec­u­la­tors, as far as Fin­week can re­call, is a nom­i­nee com­pany as­so­ci­ated with Stein­hoff boss Markus Jooste. In­ter­est­ing…

Other small cap ac­tiv­ity over the hol­i­day pe­riod in­cluded tomato-based condi­ments maker AHVest (for­merly All Joy Foods) mak­ing an of­fer to mi­nor­ity share­hold­ers with a view to delist­ing the busi­ness, and sus­pended Se­cu­rity group Com­mand buy­ing out the shares it doesn’t al­ready own in Comwezi Se­cu­rity. Wood­work­ing group Wil­liam Tell an­nounced it would sell its chip­board man­u­fac­tur­ing plant to a Brazil­ian com­pany called Soroteca.

But the big guns weren’t en­tirely silent. Sa­sol bought into the Mont­ney Shale Basin in Canada, pay­ing roughly R7bn for the priv­i­lege of a 50% par­tic­i­pa­tion right.

Per­haps more fas­ci­nat­ing was the news that in­dus­trial con­glom­er­ate Bid­vest forked out al­most R500m to buy out Bri­tish-based fresh fish pro­ducer and dis­trib­u­tor Seafood Hold­ings. Bid­vest now has seafood in­ter­ests in Namibia and Bri­tain. We won­der how long be­fore one of SA’s seafood com­pa­nies falls into Bid­vest’s clutches? Hasen­fuss holds deben­tures in Sal­lies (which he’s de­ter­mined not to swap for paper in Maghreb).


An­other fishy deal

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