Can Nampak play nicely with angry investors?
It would seem that change is afoot at Nampak at long last — thanks to some much-needed shareholder activism at Africa’s largest packaging group.
The JSE- listed company, whose market capitalisation is barely R800 million, had been quite adamant recently that it needed a rights issue of up to R2 billion to help it, among other things, refinance its large debt, as well as invest in its operations.
The size of the potential rights issue, more than double its market value, alarmed investors, especially as there was scant information regarding exactly how it would be spent.
Some shareholders expressed concern that the group appeared to want to be given a blank cheque book.
However, last week the group pressed pause on these plans after discussions with shareholders, who apparently had pushed back against the quantum requested.
It is understood they also wanted more clarity on the motivation for the capital raise.
The company, however, did not exactly elaborate on who exactly the mystery shareholders were that it was talking to despite being grilled about it at its AGM last Wednesday.
The Financial Mail reports that the changes are seemingly being led by a new investor called A2 Capital.
It is understood it enjoys the support of a large block of shareholders. It is not clear, though, if this includes larger institutional shareholders.
Nevertheless, it is heartening to know that Nampak is listening to the concerns of shareholders and not just pushing back against the calls for change.
It has also helpfully promised to deliver quarterly updates to keep investors in the loop about developments at the company, especially details relating to the rights issue, with an update expected by the end of this week.
What is hoped, though, is that when it does publish this update, it comes back with some good news in the form of a reduced rights offer.
Perhaps it should also use the opportunity to take all shareholders into its confidence and give some muchneeded detail about who exactly it has been talking to.
It is hoped, too, that Nampak, in time, looks to give some seats on its board to representatives from this activist grouping, not least because the company is in desperate need of new ideas.
In recent years, it has seemingly lost its way, expanding too rapidly in other geographies and sometimes in segments — like glass — that have come back to bite it. It was a massive mistake to take on dollar-denominated debt to fuel its expansion quest.
While it is still early days, perhaps with some fresh blood on board the company can even plot a path to restoring its fortunes.
The size of the potential rights issue, more than double its market value, alarmed investors, especially as there was scant information regarding exactly how it would be spent.