Kolosus has until June to comply with JSE listing requirements
February 2, 2004
By Nicky Smith
Johannesburg - The JSE Securities Exchange had given listed hides and meat company, Kolosus Holdings, until June to ensure its free float complied with JSE listing requirements, Paul Schouten, the managing director of Kolosus, said on Friday when interim results were released.
Kolosus had a clawback rights offer in December. A clawback takes place after new shares are offered to existing shareholders. If they do not want them, the shares are offered to new investors.
Kolosus had hoped the rights offer would go some way to raising the cash it needed to service its R200 million debt.
Of the 140 million new shares that were offered to investors, little more than 1 million were taken up, leaving German industrialist Claas Daun of Daun et Cie to pick up the remaining shares, bringing his holding to 97.82 percent of the issued share capital.
In August last year Daun's company, Daun et Cie, got competition authority approval to merge with Kolosus.
The JSE requires companies listed on the exchange's main board to have at least 20 percent of its shares freely tradeable.
"Quite honestly it would suit us better if we weren't listed," he said, explaining that things such as audit committees, circulars to shareholders, and so on absorbed valuable management time.
The large Daun holding also frustrates Schouten's management from leveraging business opportunities between the various Daun business divisions, since Daun is a related party and cannot vote on any of these transactions.
He said the board had spent most of its time dealing with the legal challenges against the firm rather than focusing on its direction and management.
But the Kolosus share had a "terrible trading history", he said, hinting that investor interest in the counter could be anaemic for some time.
"We obviously intend to turn this around and make it profitable. But it is four months into a turnaround. It is very early days," he said.
Kolosus on Friday reported a widely anticipated loss for the interim period to October. But some divisions performed above analysts' expectations.
The stronger rand and low local meat prices caused by an overproduction of beef depressed trading for the company.
It recorded a net loss of R11.2 million from being R12.7 million in the black by the end of October the year before.
It made an operating profit of R14 million from continuing operations and R4 million net profit from continuing operations.
Turnover dropped 17 percent to R474.8 million, it had R11.5 million in cash and cash equivalents, and headline earnings a share fell 23 percent to a 3.17c loss a share.
Schouten said the new management had made progress but he did not want to be too bullish on the firm's prospects, since people traded and speculated on the Daun name. Much still needed to be done.
The share closed unchanged at R1 on Friday.
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