Resilient cave-in fails to slow share crash

● Despite Resilient acceding to pressure from the market to clarify its structure by announcing an independent review of its cross-shareholdings, the share price continued to plummet on Friday.

The independent review, which will be led by Shauket Fakie, an independent director of Absa and former auditor-general, comes after three reports targeting the company were circulated in the past two weeks.

Since January, when it was rumoured that research company Viceroy was due to release a report on Resilient, the stock has lost 50%. Half of this drop occurred since Monday after three critical reports had been circulated. Viceroy never released a report.

Bryan Hopkins, head of Resilient’s board audit committee, said: “The board was anxious to conclude this matter as soon as possible. We are striving to meet on Monday, whereafter a way forward will be charted.”

The external reviewers would have unrestricted access to whatever information they needed, he said.

At issue are Resilient’s cross-holdings in other companies. The company said in a SENS statement it had “noted the consistent feedback from its shareholders that the cross-shareholding of Resilient with Fortress should be unwound and the need to reconsider its relationship with the [BEE scheme] Siyakha Education Trust”.

Len van Niekerk, an analyst at Nedbank, said the review was positive and at “no point during this saga was management cagey”.

But other factors had also contributed to a perfect storm for the company, said Van Niekerk. Asset managers were selling the share even before it fell out of the JSE Top 40 and the rand’s strength was affecting its value as a rand hedge. Ultimately, though, the company had a strong track record.