Mvelaphanda Group continues to trade positively with a key focus on unlocking
value for shareholders. It is the stated intention of the board
to achieve, at a minimum, the intrinsic net asset value as reported for shareholders.
Challenges to current structure
Discount to INAV remains significant since merger (at 31 August 2009 – 25%, 43% at year-end).
Historical deals done on attractive terms not likely to be replicable (discounts and facilitation).
BEE undertakings restrictive (financing).
Significant investment opportunities largely in listed sector (most of Mvelaphanda Group shareholders can invest directly into underlying company).
Acquired Avusa and Vox Telecom at peak of economic cycle with little probability of receiving
purchase price back in the medium-term.
Mvelaphanda Group is an investment trust requiring intermediate distributions and significant value realisations.
Options considered included the following:
Consolidate/merger with like-minded and positioned entity.
Raise capital and follow asset management model (versus holding company model).
Sell some assets and downscale operations (continue to trade as a listed holding company).
Unlocking value through a combination of sales, unbundling/listing of assets to Mvelaphanda Group
shareholders.
Proposed realisation/unbundling of assets and distribution in the most efficient and orderly manner
DETAILS
TIMING
Life Healthcare
Mvelaphanda Group in discussions with balance of the shareholders as to unlocking value in the most
efficient manner
Ongoing discussions. Communication at
Mvelaphanda Group AGM
Absa
Options exercised – 1 June 2009 (36,6 million
shares owned)
Funded through the following mechanism:
Sanlam – three-year funding
DFI’s – five-year funding with ability to repay at
any time before three years and six months
March 2011 to June 2012
Mvelaserve
Following certainty around TFMC, value unlocking
will commence
H2/2010
Group Five
BEE structure matures in 2014. Mvelaphanda Group holds 10,7 million BEE options (12%)
In addition, Mvelaphanda Group owns 2 million
unencumbered Group Five shares
2012
Avusa/
Vox
Non-BEE
shares
25 million Avusa shares (25,5%) not subject to any lock-in nor restraint
137,5 million Vox shares (12,3%) not subject to any lock-in nor restraints
Ongoing assessment in view
of market conditions
Other investments
Swissport
Steinhoff and Unitrans Fuel and Chemicals
Ongoing assessment in view
of market conditions
Preference shares
Convertible at the instance of the holder between 4 November 2009 and 4 November 2010 – still carry
5,5% coupon rate till then:
Mvelaphanda Group can redeem at anytime after
November 2010
Match preference share redemption with
investment realisation
Seeking authority to buy back preference shares – AGM 2009
In order to affect a successful value unlocking strategy the board of Mvelaphanda Group will be proposing the following at the annual general meeting (“AGM”) in November 2009:
Reduced board size focused on independent non-executive director representation.
New management structure (outsourced) at a fixed fee.
Authority to buy back preference shares.
Further detail as to value unlocking plan will be communicated prior to or at the AGM.
