Seeks R5.25 bil­lion from rights offer

Is­sue would pro­vide in­vest­ment com­pany with a de-geared bal­ance sheet and re­turn some cash to share­hold­ers

Pretoria News - - BUSINESS REPORT - SANDILE MCHUNU [email protected]

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.

LUKE MAC­GRE­GOR Bloomberg

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. |

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