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.