Finweek English Edition - - FEEDBACK - Moemise Mot­sepe

and a foun­tain of in­spi­ra­tion for those who seek South Africa’s inclusive growth. Head: Mar­ket­ing & Com­mu­ni­ca­tions

National Em­pow­er­ment Fund was R82.76, which was the case at the end of Au­gust 2008. Sappi un­der­went a rights is­sue in Novem­ber 2008 at a “65% dis­count” to the share price. Re­mem­ber Sappi was rais­ing money for the M-Real ac­qui­si­tion in the mid­dle of ab­so­lute mar­ket tur­moil that was 2008.

Hav­ing done some read­ing up on the sub­ject the the­o­reti the­o­ret­i­cal ex-rights price (TERP) model in fact has the price of R37.53/share at the time of the deal.

By my hum­ble cal­cu­la­tions (plus cal­cu­la­tions done by an­other an­a­lyst) Sappi went from be­ing a R13.9bn bu busi­ness be­fore the rights is­sue, to a R19.7bn busi­ness post the rig rights is­sue. As of 9 . Septem­ber, the Sappi mar­ket cap­i­tal­i­sa­tion is… drum roll… R13.3bn.

A Ac­cord­ing to the 2009 Sappi an­nual re­port, CEO Ralph Boettger was earn­ing $1.07m in that fi­nan­cial year. To­day he earns $1.72m – nearly a 64% in­crease, which has ob­vi­ously got share­hold­ers, in­clud­ing the Pub­lic In­vest­ment Cor­po­ra­tion (PIC) and share­holder ac­tivist Theo Botha, up in arms.

In con­clu­sion: Yes, it could be ar­gued that the rights is­sue might cre­ate a bit of a dis­torted pic­ture of the Sappi share price and we con­cede that. No, it doesn’t change the fact that Sappi has de­stroyed a lot of value and you can buy sig­nif­i­cantly less than you could in 2008.


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