| Thu 27 Nov 2003, 18:03 | | Sekunjalo Launches R80-Million Rights Offer |
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Sekunjalo Launches R80-Million Rights Offer
Sekunjalo Investments Limited
(Company registration no: 1996/006093/06)
Share code: SKJ ISIN: ZAE000017893
("Sekunjalo")
SEKUNJALO LAUNCHES R80-MILLION RIGHTS OFFER
Sekunjalo, the listed industrial holding company, has launched an R80-million
substantially underwritten rights issue that will wipe out most of the company"s
debt and set it on a launch pad for "significant earnings growth."
Apart from reducing it"s gearing and strengthening its balance sheet, the
company plans a strategic expansion of its healthcare and fishing interests
where it already is a significant industry player.
The first stage of this growth process is to increase its current number of
generic dossiers by acquiring more dossiers from multi-national pharmaceutical
companies while increasing its holding in its Sekpharma subsidiary to just under
60%.
Nedbank Corporate says Sekunjalo intends raising R80-million before expenses by
way of an 82.6% underwritten rights offer.
The rights offer is underwritten by Futuregrowth Asset Management,agent for
Momentum Group Limited and Sekunjalo Investment Holdings, Sekunjalo"s
controlling shareholder. This is a major vote of confidence by the controlling
shareholder which believes that Sekunjalo is trading at a huge discount to its
underlying value and has significant potential for future growth.
The rights issue is priced at 55c in the ratio of 168 new B shares for every 100
B shares held on Wednesday, 24th December 2003. It will result in the issue of
145 454 545 new B shares and will close on 23rd January 2004.
At the same time the company, which has won two major Black Economic Empowerment
awards this year, has released year-end figures to 31 August 2003, which show
Headline earnings per share easier at 18.09 cents per share, compared to 19.07
last year.
Net profits for the year dipped to R12.28-million from a previous R16.92-
million, while cost of sales rose from R185-million to
R215-million.
But these figures mask a sea change in Sekunjalo"s underlying fortunes.
"Sekunjalo"s reconstruction and restructuring initiative is now complete and the
company has become a lean machine very well placed for significant earnings
growth," says Dr Iqbal Surve, the group"s chief executive officer.
"I told the market it would take 18-months and we are now approaching the time
when we must seriously consider dividend payments to our shareholders."
Dr Surve said that at first glance, the lower net profits may appear
disappointing. But they were the result of a 40% drop in the rand exchange rate
on the company"s rock lobster and fish exports, and a once off debit for
reconstruction costs, which is now completed.
Furthermore, the company had to fund the further 24% of Premier Fishing it
bought from the IDC to give it 81% of the country"s top rock lobster and hake
exporter. Part of the cost of the acquisition has been taken into this years
income statement as a once off cost.
"Sekunjalo with 81% of Premier is the most empowered of any large fishing
company and has the strongest empowerment credentials. As in the past our
significant black shareholding should stand us in good stead when long term
fishing quotas are awarded in 2005." says Dr Surve.
He says the coming year looks good for Sekunjalo.
"The rights issue will save the company some R10-million in financing costs,
while Premier Fishing is fast expanding its markets into China, the U.S. and
several major African countries."
Premier is implementing a branding strategy for its key products and its abalone
farm is putting in a solid performance with the use of new scientific growing
techniques.
"The re-structuring in our healthcare business has been completed, the
businesses have been decentralised and now have focused management teams that
have `buy-in" options," said Dr Surve.
"We are building up a significant dossier of generics with multi-nationals and
our focus on infectious diseases is specialising on anti-retrovirals. In short,
Sekunjalo"s future in both fishing and healthcare looks very bright," says Dr
Surve.
Sekunjalo information technology business, Health System Technologies which was
awarded the R180 million tender to supply government, hospitals such as Groote
Schuur, Tygerberg and Red Cross Children"s Hospital is one of the success
stories for black economic empowerment in the I.T. Sector. The Provincial
Administration for the Western Cape has as a result of this success rolled out
the second phase of this tender into secondary hospitals and government clinics
as well.
Date: 27/11/2003 05:41:03 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
