Seeks R5.25 billion from rights offer
Issue would provide investment company with a de-geared balance sheet and return some cash to shareholders
BRAIT WANTS to raise R5.25 billion through a rights offer as the investment holding company seeks to recapitalise its balance sheet and return some of the cash to its shareholders.
Brait intends to issue 795.45 million new shares to qualifying shareholders at a price of R6.60 a share, which represents a 48.6 percent discount to the JSE closing price of R12.85 a share on Monday.
Brait said yesterday that it intended to use the net proceeds for the repayment of the remaining £170 million (R3.2bn) of the outstanding convertible bonds due in September 2020 and to partially repay Brait Mauritius’s existing committed revolving credit facility.
“As part of the overall recapitalisation this provides Brait with a de-geared balance sheet and extended debt maturities, providing an opportunity to drive value in its core portfolio of assets,” Brait said.
Brait informed the market in November last year about its intention to undertake an equity capital raise of between R5.25bn and R5.6bn as it sought a way to recapitalise balance sheet.
The rights offer announcement led to the share price declining by almost 12 percent on the day, but yesterday the share price was marginally up by 0.78 percent in the afternoon before ending the day at R12.80.
Brait, the owner of Premier Foods, Virgin Active, UK retailer Iceland and struggling UK clothing group New Look, has been faced with mounting challenges to turn business around, especially at New Look, where shoppers defected to trendier online fashion sellers.
In November, the investment holding company entered into a strategic partnership with Ethos Capital.
The move saw Ethos Private Equity becoming an adviser to Brait at a materially lower cost to the existing advisory contract.
Brait also announced a change of its strategy whereby it said it would move from its existing strategy of a long-term investment holding company to a new strategy that would focus on maximising value through the realisation of its existing assets in the portfolio over the next five years and returning capital its to shareholders.
Last week Ethos Capital announced its intention to raise R750m through a renounceable rights offer of 100 million Ethos Capital A ordinary shares at a price of R7.50 per rights offer share to assist Ethos Capital in fully funding its commitment to invest in Brait’s proposed equity capital raise.
Ethos Capital also became a new strategic equity partner through their overall investment of R1.35bn in Brait.
Nesan Nair, a senior portfolio manager at Sasfin Securities, said that the plans to put Brait on a sound footing are welcomed, but he cautioned about the huge amount that was asked from its shareholders.
“Brait indicated earlier that they were looking to reshape their balance sheet.
“But the R5.6bn is a lot of money to ask shareholders to chip in,” Nair said.
BRAIT, the owner of Premier Foods, Virgin Active, UK retailer Iceland and struggling UK clothing group New Look, has been faced with mounting challenges to turn business around, especially at New Look. |