No takers for 1c offer for Abil BEE shares

THE only sign of a buyer for either of African Bank’s two empowerment shares, Hlumisa and Eyomhlaba, on Friday was a single bid of 1c a share for Eyomhlaba.

There was no sign of sellers at this price, and certainly no sign of any trading activity at the 99c quoted on Friday on Eyomhlaba’s platform.

The Hlumisa platform was quoting a share price of 30c on Friday but, unsurprisingly, there was no trading at that level.

This is because once Abil drops below 280c a share, as it did this week during its plunge, Hlumisa and Eyomhlaba have no value.

That shareholders are not enticed by the 1c a share offer reflects the hope that if Abil is put back on its feet it will continue to need black empowerment shareholders.

Eyomhlaba has debt of R112million and at Abil’s current share price has equity of R25million. Hlumisa has debt of R65-million and its stake in Abil is currently worth about R12-million.

The two schemes hold a combined stake in Abil of 5%, down from about 9% ahead of last year’s R5.5-billion rights issue.

Craig Gradidge, of Gradidge- Mahura Investments, said that the two schemes chose to sell their rights and apply the proceeds to reduce debt that had been used to build their stake in Abil in 2012.

That decision saw the Eyomhlaba debt reduced from R330-million to R112-million and Hlumisa’s from R180million to R65-million.

Gradidge, who is critical of the schemes’ directors for their failure to communicate with shareholders, said that in 2012 both schemes were free of debt.

“Then the directors proposed that the schemes take on new debt in order to increase the stake in Abil; this was when Abil was trading at around R35 a share.”

Gradidge said that right now the priority was to save the business and the jobs involved.

“The situation hasn’t fully played out yet. Once Abil’s institutional shareholders have indicated what they’re going to do we might have a better idea of what will happen to the schemes. We’re waiting for some clarity from the directors.”