PROFILE Back in the game
It could be argued that SA’s enduring empowerment contenders are the companies that have doggedly fought their way through lean times.
Some of the JSE’s most successful empowerment counters — Hosken Consolidated Investments, African Equity Empowerment Investments (the old Sekunjalo) and Brimstone Investment Corp — struggled through dark years where a delisting from the JSE might have been (and in some cases was) the easy way out.
What is common to all these cases is that it took strong personalities to hold the companies together and rally shareholder support in trying times.
Last week Brian van Rooyen, the forgotten man in SA empowerment, hit the headlines with Labat, the company he has led since 1995. He confirmed most key conditions precedent had been met on a R645m transport deal that increased the share price more than tenfold in less than six months.
But Van Rooyen, a feisty figure who will also be remembered for a stormy term as head of SA Rugby, has not had it easy on the local empowerment field. Since listing on the JSE in the late 1990s (as a consulting firm) Labat has probably needed to maul harder than most BEE contenders for viability.
Labat has a chequered investment record, including dabbles in furniture retailing, traffic management technology and microchip manufacturing, and unsuccessful attempts at pharmaceuticals and oil and gas exploration. Labat may have slipped from the market’s view, but Van Rooyen realises the importance of its survival. “Of the black-owned companies dating back to the late 1990s listings boom, not a lot are left.”
He says about five years ago a stripped-down Labat was on the verge of delisting from the JSE. But the failed reverse listing by controversial mining entity Aurora kept Labat in the game.
“We were looking at delisting when Aurora approached us. Fortunately we were able to pull out when it became apparent Aurora was stalling on the offer to our minority shareholders.”
The upside was that Van Rooyen managed to keep international funder Global Emerging Markets (GEMS) — initially keen to be involved in the transaction — on board as a backer.
Without its equity-linked draw-down facility of R1,2bn, which Van Rooyen persuaded them to keep open, there would have been limited scope for Labat to scout for deals.
“I went to see GEMS in New York to make sure we could secure the facility. They agreed, but they were keen for us to start bringing deals to the table. And that’s what we did with the R645m reverse takeover by Reinhardt Transport Group.”
Van Rooyen won’t yet be drawing down on the GEMS funding to settle even a portion of the transaction — though the US firm has technically underwritten the Reinhardt transaction should planned funding mechanisms fall through. New loans will be raised, shares issued to the vendors and fresh cash raised by placing shares with institutional investors.
“We want to ensure we retain our empowerment status and gain some momentum in our deal-making activities before drawing down on the GEMS loan. This should see our share price better reflecting our prospects, and trading at levels where we are happier to issue scrip to GEMS.” The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is a grotesque betrayal of everything the European project was supposed to stand for. Economist Paul Krugman, writing in the New York Times on the terms of a Greek bailout