Lone in­vestor vies for the rem­nants of Abil’s wreck­age

The Star Early Edition - - BUSINESS REPORT - Wise­man Khuzwayo

A LO­CAL in­vestor is ea­gerly eye­ing buy­ing part of the wreck­age left by the fail­ure of African Bank In­vest­ment Limited (Abil) ear­lier this year.

Frank Cadiz, the man be­hind Deep Value In­vest­ments, wants to buy Abil pref­er­ence shares and has sent of­fer let­ters to a se­lect group of Abil pref­er­ence share­hold­ers.

Pref­er­ence shares usu­ally pay a fixed div­i­dend while or­di­nary shares do not.

Un­like or­di­nary share­hold­ers, pref­er­ence share­hold­ers do not have vot­ing rights.

Abil had 13.5 mil­lion pref­er­ence shares listed on the JSE when it col­lapsed in Au­gust.

“The pref­er­ence share hold­ers are both in­sti­tu­tions and in­di­vid­u­als,” Markus Borner, Abil’s ex­ec­u­tive re­spon­si­ble for bal­ance-sheet man­age­ment, said in an e-mailed re­sponse to ques­tions. “There is no pub­lic reg­is­ter and we don’t dis­close own­ers ei­ther, as is the case with all banks.”

Cadiz, who is also the chief ex­ec­u­tive of Cadiz As­set Man­age­ment, said yes­ter­day he was act­ing in his per­sonal ca­pac­ity.

“Deep Value In­vest­ments is of­fer­ing R5 per pref­er­en­tial share. That is close to where they were trad­ing at the col­lapse of African Bank. We are wait­ing to see if there are any sell­ers, but so far we have not had any trans­ac­tions,” he said.

An of­fer of R5 a pref­er­ence share rep­re­sents a 36 per­cent dis­count on R7.80, the price on Au­gust 8 be­fore Abil failed.

Cadiz, who co-founded Cadiz Hold­ings in 1993, said his war chest was “not very big”.

“Deep Value may be­lieve that the pref­er­ence shares will have a re­cov­ery that is more than what they are of­fer­ing, or it could be they see the debt ne­go­ti­a­tions be­ing com­pli­cated,” Jean Pierre Ver­ster, an an­a­lyst at Jo­han­nes­burg-based 36ONE As­set Man­age­ment, said.

“If they have some kind of other in­ter­est in Abil, such as eq­uity, they want to hold the pref­er­ence shares to make sure they have more bar­gain­ing power and can sway a more favourable out­come,” Ver­ster added.

Deep Value was regis­tered on Septem­ber 10, and Cadiz is the sole di­rec­tor, ac­cord­ing to a company search. Cadiz was ap­pointed chief ex­ec­u­tive of Cadiz Se­cu­ri­ties in 2002 and as chief ex­ec­u­tive of Cadiz As­set Man­age­ment in 2004.

While head of the Cadiz eq­uity de­riv­a­tives team, he was rated as the top de­riv­a­tives an­a­lyst in South Africa.

The of­fer by Deep Value might turn out to be at­trac­tive to pref­er­ence share­hold­ers, who were re­quired to take a 10 per­cent loss in value un­der the res­cue plan for Abil put to­gether by the SA Re­serve Bank

Abil said the of­fer by Deep Value had noth­ing to do with its own re­struc­tur­ing plan, which is ex­pected to see the bank relisted in Jo­han­nes­burg early next year.

The African Bank ad­mi­nis- tra­tor is plan­ning an ini­tial pub­lic of­fer­ing for part of Abil, po­ten­tially al­low­ing in­vestors to re­coup some losses.

Tom Win­ter­boer, ap­pointed as ad­min­is­tra­tor by the SA Re­serve Bank , did not im­me­di­ately re­spond to a mes­sage left on his cell­phone.


A pedes­trian passes an African Bank branch, a unit of African Bank In­vest­ments (Abil), in Jo­han­nes­burg. There is re­newed in­ter­est in its pref­er­ence shares.

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