Get-out stakes for Rebosis
DEBT-BURDENED: POSSIBLE RESCUE DEAL Announcement fuels speculation group could be delisted.
Rebosis Property Fund – the debt-burdened real estate investment trust (Reit) with a sector-high loan-to-value ratio (LTV) of over 75% – saw its share price surge 34.78% on Wednesday on news of a possible rescue deal being negotiated with unnamed local and foreign investors.
The stock closed at R0.31 per share, which amounted to a gain of just eight cents per share on the day as it is now regarded as a micro-cap, with a market capitalisation of around R161 million.
But the Reit’s dividend-starved shareholders will be hoping a deal materialises to unlock some lost value – the stock has plunged over 96% in the last three years.
Rebosis issued a cautionary advising shareholders of talks underway. The announcement has fuelled speculation that the group, founded by property entrepreneur Sisa Ngebulana, could be delisted and effectively “taken private”.
“Shareholders are advised that the company has signed non-disclosure agreements and [is] currently in negotiations with local and offshore institutions and pension funds for a transaction that, if successfully concluded, could fundamentally change the financial matrix of Rebosis and crystallise value for shareholders,” the group notes. “The proposed transaction will be subject to due diligence and various regulatory approvals and the conclusion of formal agreements.”
According to Rebosis, if concluded, the proposed transaction will be classified as a category 1 transaction, requiring a circular and (majority) shareholder approval.
Ngebulana has lost control as its biggest shareholder to rival Zunaid Moti, a Johannesburg car dealership tycoon.
Moti and Ngebulana have been caught up in a court battle after Ngebulana’s Amatolo Trust failed to pay Moti for its stake, which was announced in November last year and would have seen Ngebulana regain major control of the group.
Ngebulana, who is still the group’s chief executive, did not want to comment further on the talks currently underway with new investors. It is unclear whether this deal involves Moti or one of his associates.
Some industry analysts believe the deal could be related to the planned disposal of Rebosis’ office property portfolio, to reduce the group’s LTV and debt burden, which stands at over R9 billion.
Most analysts did not want to comment on the cautionary. Many no longer cover the company due to it being a micro-cap.
However, Ian Anderson, a portfolio manager and head of listed property at Counterpoint Asset Management, points out “it’s too early to speculate” on what is likely to happen.
“Management at Rebosis have indicated in previous results presentations that one of the options they would consider in order to unlock shareholder value, would be to take the company private,” he notes.
“As a listed property fund, the current LTV is too high for most investors to stomach… A significant number of assets would need to be disposed of before the LTV is in the right range ... somewhere between 35% and 40%,” he says.
“The [group’s] previous JSE Sens announcement regarding changes in company ownership suggested, if Citax Investments is a Moti associate, he now controls more than 35% of the company, which should have resulted in an offer being made to shareholders. Rebosis did indicate they had filed the required notices with the Takeover Regulation Panel.”
According to Sens statements, Citax Investments SA is now the second biggest shareholder in Rebosis after Moti.
Anderson says Rebosis’ latest cautionary “was rather vague”. This has fuelled speculation.
However, the fund’s immediate problem is its record-high LTV, which should be “the first thing it needs to address”.