No festive raids
But plenty activity on the fringes over Christmas break
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).
BIDVEST’S BRIAN JOFFE
Another fishy deal