ASSORE is to bring the curtain down on 70 years as a publicly listed company announcing today a R7.8bn buy-back of shares held by minority shareholders – a historic moment for the bulk minerals firm motivated by the low level of liquidity in the stock.
“This offer, which we have been contemplating for some time, gives some of our long-standing and faithful minority shareholders an opportunity to exit their Assore shareholding at a fair long term valuation and at a significant premium to the recent market,” said Charles Walters, CEO of Assore in a prepared statement.
Excluding shares held by the majority Sacco family both through its investment vehicle – Oresteel Investments held in joint venture with Japan’s Sumitomo Corporation – and in family members’ private capacity, Assore’s free-float is only 17%, the company argued.
In addition to Oresteel Investments, which has 52.4% of shares issued, some 26.1% of the company is owned by black economic empowerment interests.
Assore has proposed a scheme of arrangement in which it will use its internal cash resources, recently reported at the interim stage at some R8bn, to buy back shares in the firm at R320 per share.
The offer price is equal to a 27% premium to the 10-year average share price of some R252/share, and excludes the recently announced interim dividend of R7/share. The offer also represents a 10% to 20% premium to current consensus broker price target range for the share of between R270 to R290/share, and a 51% premium to the 30-day volume weighted average price (VWAP) for the share (R212/share).
Following the transaction, the shareholdings of Oresteel, BEE and the Sacco family in Assore will be increased pro-rata to 63.4%, 31.6% and 5%, respectively, and the company will be delisted from the JSE and run privately, said Assore.
Assore has totemic relevance in South Africa’s mining sector having been ever-present on the Johannesburg Stock Exchange since 1950.
It reported a 28% decline in interim earnings of R21bn in February, partly owing to a deterioration in the chrome price.
Most of the performance was related to Assmang – in which Assore has a 50% stake – which reported headline interim earnings of R3.7bn compared to R4.3bn in the previous interim period. Assore’s R7/share is down from a R10/share interim dividend in 2018.
Cash fell to about R8.1bn as of end December 31 down from R9bn at the firm’s year-end point on June 30 which Walters said was a consequence of an estimated R1.4bn in adverse working capital movements.