Con­spir­acy the­o­ries fire up over lack of div­i­dend

Financial Mail - Investors Monthly - - Analysis -

ndus­trial group How­den Africa, a provider of fans, com­pres­sors and heat ex­chang­ers to Eskom and the min­ing sec­tor, looks a scary place to be right now.

In the past three months the com­pany’s share price has lost around 30%, driven down by a dogged de­ter­mi­na­tion by di­rec­tors not to pay out div­i­dends.

On pa­per, How­den, with R650m (roughly R10/share) in cash at its fi­nan­cial year end, could af­ford a de­cent dis­tri­bu­tion. Even a much re­duced pay­ment might go some way to­wards a diplo­matic so­lu­tion (IM hears that some share­hold­ers have al­ready

Ipe­ti­tioned the com­pany to con­sider a spe­cial div­i­dend). In­stead How­den has risked es­trang­ing its big­ger in­sti­tu­tional share­hold­ers, some of whom have been out­spo­ken on the div­i­dend con­tro­versy.

Ini­tially, di­rec­tors de­layed the div­i­dend so as to bring a new em­pow­er­ment trans­ac­tion to the ta­ble. That has not hap­pened, and there are valid ques­tions around how much cash would re­ally be needed to struc­ture such a deal.

But more re­cently the com­pany of­fered fur­ther jus­ti­fi­ca­tion for with­hold­ing pay­outs, in­clud­ing shoring up the

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.