GPI exits food business as it unbundles stake in Spur
JSE-LISTED Grand Parade Investments (GPI) has announced its complete exit from the food businesses.
GPI said yesterday that it was unbundling its 9.28 percent interest in Spur Corporation, unbundling its Burger King South Africa (BKSA) accounts and placing Mac Brothers under voluntary liquidation.
The unbundling of Spur consists of the distribution of GPI’s more than 8.4 million Spur shares valued at about R174 million at a current price of R20.65, equivalent to 37 cents per GPI share.
Shareholders will receive one Spur share for every 63 GPI shares, subject to the fulfilment of the condition precedent.
GPI chief executive Mohsin Tajbhai said the unbundling of the Spur shares was aligned with the group’s strategy to unlock value by reducing the discount at which GPI shares trade, relative to the intrinsic net asset value of GPI’s underlying assets.
Tajbhai said the unbundling of the Spur shares will give GPI’s shareholders the opportunity to hold a direct interest in Spur rather than through GPI.
“The unbundling is part of GPI’s strategy to unlock value and to reduce the discount at which the company trades relative to the intrinsic Net Asset Value of its underlying assets,” Tajbhai said.
The unbundling could be finalised by next month should GPI get approval from the South African Reserve Bank.
GPI is now left with its 15 percent interest in SunWest, 15 percent interest in Golden Valley Casino, and 30 percent interest in Sun Slots.
These businesses have performed extremely well following the relaxation of the Covid-19 restrictions.
Both SunWest and Sun Slots have resumed dividend payments and are well positioned to take advantage of the gradual return to normality.
During the past two years, management have made good progress in unlocking value in the business which included a significant reduction in debt and head office costs.
In addition to unbundling its shares in Spur, GPI has completed the BKSA transaction following plans to sell the BKSA and meat plant companies, Grand Foods Meat Plant, in 2020.
GPI sold its stake in Burger King South Africa in December 2021 to private equity manager, Emerging Capital Partners Africa Fund, a US-founded international private equity fund.
However, the sale faced delays due to Covid-19 and when the Competition Commission flagged a lack of historically disadvantaged persons among the new owners.
Yesterday, GPI said the transaction had been completed and that it has resumed dividend payments after declaring a dividend of 88c per share – the largest in its history – following the sale of Burger King.
GPI said that documents related to those sales had been finalised and cash considerations had been agreed as being R494m and just more than R20m, respectively.
It said the agreed amounts represented a reduction on the purchase price estimates by R1.7m and R1.2m, respectively. Meanwhile, GPI placed Mac Brothers, a stainless steel catering and refrigeration equipment manufacturer, in voluntary liquidation in a bid to stem its losses.
The share price closed on the JSE 0.38 percent higher at R2.63 yesterday.