Stein­hoff raises R3.67bn via KAP

Book­build of R8.15 a share

The Star Late Edition - - BUSINESS REPORT - Sandile Mchunu

STEIN­HOFF In­ter­na­tional raised R3.67 bil­lion through an ac­cel­er­ated book­build of up to 450 mil­lion or­di­nary shares in KAP In­dus­trial Hold­ings at a price of R8.15 a share.

Stein­hoff said the book of de­mand was mul­ti­ple times over­sub­scribed.

“The plac­ing price rep­re­sents a dis­count of 4.1 per­cent to the KAP clos­ing price on Mon­day,” Stein­hoff said yes­ter­day af­ter­noon af­ter the clos­ing of the book-build.

The plac­ing shares con­sti­tutes ap­prox­i­mately 16.7 per­cent of KAP’s is­sued share cap­i­tal, and this will re­duce Stein­hoff stake in KAP to 26 per­cent, down from 43 per­cent. The trou­bled re­tailer said yes­ter­day that it was tak­ing steps to re­fi­nance or re­deem the debt within its South African op­er­a­tions.

The launch of the book­build neg­a­tively af­fected KAP’s share price as it de­clined by 3.16 per­cent to R8.23 a share on the JSE yes­ter­day morn­ing be­fore end­ing the day at 0.47 per­cent higher at R8.54.

Peter Takaen­desa, a port­fo­lio man­ager at Mer­gence In­vest­ment Man­agers, said the de­cline of the share price dur­ing the day could be partly due to the place­ment of shares by Stein­hoff as well as the gen­eral sell-off of do­mes­tic stocks so far in the morn­ing.

“KAP shares have lagged the re­cov­ery we have seen in other do­mes­tic stocks since De­cem­ber 2017 as the mar­ket has been ex­pect­ing Stein­hoff to sell some of its 43 per­cent share­hold­ing in KAP at a dis­count,” Takaen­desa said.

Stein­hoff also sold 20.6 mil­lion shares in in­vest­ment firm PSG Group to raise R4.7bn in De­cem­ber as the group tried to raise fi­nance af­ter its mar­ket cap­i­tal­i­sa­tion de­clined by R200bn fol­low­ing the ad­mis­sion to ac­count­ing ir­reg­u­lar­i­ties.

The sale of PSG Group shares rep­re­sented 9.5 per­cent of Stein­hoff ’s orig­i­nal 25.5 per­cent stake in PSG. About KAP, it said it con­tin­ued to view the com­pany as a com­pelling in­vest­ment, es­pe­cially in view of re­cent events in South Africa and the prospect of im­prov­ing eco­nomic con­di­tions.

“On suc­cess­ful con­clu­sion of the plac­ing, Stein­hoff will re­tain own­er­ship of ap­prox­i­mately 26 per­cent of KAP’s is­sued share cap­i­tal, which it views as a strate­gic in­vest­ment,” Stein­hoff said.

Stan­dard Bank and In­vestec are act­ing as joint book run­ners for the sale and Stein­hoff said the book would open with im­me­di­ate ef­fect and was ex­pected to close as soon as pos­si­ble. Stein­hoff also an­nounced that the shares would be of­fered to qual­i­fy­ing in­sti­tu­tional in­vestors only.

Takaen­desa also added that he ex­pected the shares to be over­sub­scribed as KAP has done well in the past.

In the six months to De­cem­ber re­sults, KAP re­ported a 25 per­cent in­crease in op­er­at­ing profit be­fore cap­i­tal to R1.40bn, while profit in­creased by 14 per­cent to R720m.

Head­line earn­ings an or­di­nary share from con­tin­u­ing op­er­a­tions grew to 28.3 cents a share, up from 25.5c as com­pared with a year ago.

“KAP has strong mar­ket po­si­tions in South Africa, a strong man­age­ment team and gen­er­ates solid cash flow. The com­pany has de­liv­ered dou­ble digit earn­ings growth over the past few years, de­spite a tough eco­nomic en­vi­ron­ment, and we ex­pect it to ben­e­fit from the ex­pected re­cov­ery in the econ­omy,” Takaen­desa said.

He added that KAP shares had lagged the re­cov­ery in other South African shares due to the over­hang cre­ated by its 43 per­cent share­holder Stein­hoff ’s debt prob­lems and they, there­fore, ex­pected this re­duc­tion in Stein­hoff ’s share­hold­ing to help KAP shares re­cover.

4.1% The dis­count on KAP plac­ing price on Mon­day’s clos­ing

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.