Consortium bids on Torre
Struggling small-cap company Torre Industries is to delist from the JSE, subject to shareholder and regulatory approval.
A consortium of investors comprised of Ethos Capital Partners and investment banking firm Apex has offered to buy out 100% of the company’s shares.
Charles Pettit was the main driver behind Torre and he also founded Apex.
Torre was built into a medium-sized business using the acquisition in 2012 of tower crane supplier SA French as a base.
Pettit reversed Torre into Stellar Capital Partners in 2015 but stepped down as chief executive of Stellar last August. Stellar owns 57% of Torre.
If shareholders accept the offer, they’ll receive a cash dividend of 35c per share, R1.05c per share and a deferred top-up payment of 10c per share, subject to the attainment of specific performance targets.
In total shareholders will receive between R1.40 and R1.50 per share, a 44.67% premium to the 30-day volume weighted average price. The share price appreciated immediately on news of the deal.
“I’d bite the hand off the person offering me that deal,” says small-cap expert Anthony Clark. “Torre is operating in an industry that is under extreme pressure and where investment in capital equipment has been limited over the last few years. Three months ago Torre was trading at 80c. That share is unlikely to move anywhere in a hurry.”
However, he notes Pettit is the architect who took Torre from obscurity to a decent-sized industrial firm supplying capital equipment into the mining, engineering and other sectors.
In the process, the share price rose to R3.50 and the market cap to R2 billion.
An interesting feature of the deal is that the special purpose vehicle created to finance it will be collapsed once the deal is struck.
Torre Analytical Services businesses, comprising the WearCheck, Amis and Set Point Labs divisions will be retained by Ethos, while the Torre Industrial businesses, comprising the SA French, Manhand, Torre Parts and Components, Tractor & Grader Supplies, Letaba Pumps, Elephant Lifting, and Torre Logistics divisions will be retained by Apex.