Shareholders get short deal

Investors in Imperial Holdings preference shares were dealt a blow recently with the news that the JSE-listed motor vehicle and logistics player plans to buy out all of its preference shares.

The buyout is not at the issue price of the shares. Instead, Imperial has offered to buy them back at R83 plus any dividends that may accrue during the offer period.

This means that preference shareholders will take a capital loss on this deal, while ordinary shareholders will benefit from a R64 million addition to net asset value. Admittedly, this is negligible once divided between the 202 million shares in issue.

The rationale behind the redemption of the preference shares stems from the separation of Imperial Group into Imperial Logistics and Motus, which is the integrated motor vehicle side of the group operating across the value chain – distribution, retail, import, rental, aftermarket parts and vehicle-related financial services.

Of course, shareholders would have acquired their shares on the strength of the logistics and Motus businesses together.

It is worth noting that Motus is also the more cash generative part of the business, generating 59% and 55% of group revenue and operating profit respectively, with 13% of foreign operating profit.