AVENG STILL LOST IN THE WOODS

Finweek English Edition - - SIMON SAYS -

Aveng has an­nounced the sale of 70% of its prop­erty port­fo­lio for just over R1.2bn. This helps the com­pany a bit as it pro­vides a chunk of cash (the amount is around half its mar­ket cap) but it doesn’t get it out of the woods. It will now have to lease back the prop­er­ties at a cost, and t hat R1.2bn is only sl i ghtly higher t han i t s op­erat i ng f r e e cash outf low for the last re­port­ing pe­riod. This a l so comes on t he back of a R1.5bn con­vert­ible bond it is­sued in the mid­dle of last year, show­ing just how cash-i nten­sive the in­dus­try is and how tough the cur­rent con­di­tions are. The bot­tom l i ne here is t hat t he com­pany is strug­gling and this move will not save it – it will merely ease t he pres­sure for a short while.

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