It is difficult not to feel a tad sorry for the team at Pepkor right now. Mind you, shareholders who have had to carry the cost of the R500m bailout for the top executives might not have been inclined to do so at this stage.
The executive team is facing what must be the toughest trading conditions in the group’s history. And while we used to think tough times would benefit a company that focuses on the lowest income groups, it seems the economy is so weak that parts of the lowest income groups are becoming “no-income” groups. People who were once earning R6,000 a month are now unemployed and relying on social grants, CEO Leon Lourens told analysts at the recent results presentation. What a dire situation this must be for millions of South Africans.
All in all, this is not the best time to be distracted by the machinations of a wayward controlling shareholder. It’s hard not to imagine that Pepkor management would cope better with the tough trading environment if it did not have to concern itself with what Steinhoff might do with its remaining 71% stake. Or, what the former owners of Tekkie Town might be planning next.
And you have to wonder for how much longer Jayendra Naidoo will remain as chair, given the unsettling information coming out of the Mpati commission of inquiry into the PIC. Steinhoff’s recently released 2017 annual report also highlighted fee payments to Naidoo-aligned Lancaster that the Mpati commission might want to take a closer look at. Another pending departure must surely be Jacob Wiese.
It could be that the core of the board does not want to implement too many changes given the current delicate climate. They may have thought letting go of Danie van der Merwe just hours before the results announcement was enough for now.
Will RAC make renewed takeover bid for Astoria?
The share price of the largely dismantled offshore investment company Astoria has perked up in recent weeks.
In April, Astoria, which has primary listings on the Mauritius Stock Exchange (MSX) and the JSE’s AltX, completed the liquidation of the bulk of its investment portfolio. Subsequently, this chunk of value was returned to shareholders via a large capital payment that equated to R12.82/share.
The market initially applied a deep discount to the remnants of the internationally focused portfolio.
But in recent weeks the Astoria share price has ticked up markedly — most likely on increased expectations that investment company RECM & Calibre (RAC) will make a renewed takeover bid for the company.
There is, of course, the possibility of Astoria liquidating further portfolio positions and paying another dividend. But the remaining holdings are mostly illiquid or locked-in, which precludes a quick exit by Astoria.
Significantly, RAC recently increased its stake in Astoria to 29.4%, which is awfully close to the 30% limit that, according to MSX regulations, will trigger a mandatory offer to all shareholders.
Astoria’s last stated net asset value was about 275c/share, and it will be fascinating to see what RAC are willing to pay for outright control … presuming a takeover bid is formulated.
On Monday Astoria announced that CEO Darryl Kaplan had resigned with immediate effect.
This development might fortify contentions that Astoria is now officially in limbo, and awaiting a move by RAC to signal a new strategic direction.
It should be noted that Kaplan’s resignation announcement did indicate that Astoria had embarked on a process to find a suitable replacement for the CEO position. It will be most telling regarding Astoria’s immediate future if RAC has some sway in appointing a new leader.
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