| Fri 2 Jul 2004, 8:46 | | Putco buyback offer is fair MD |
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Putco buyback offer is fair MD
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Trade and Industry Correspondent
TRANSPORT operator Putco, which plans to buy out its minority shareholders, said yesterday that its buyback offer was fair and reasonable.
This comes after rumblings from minorities that they may reject the offer, which values the shares below the market price .
Earlier this year, Putco said in preparation for restructuring, delisting and a black economic empowerment transaction set to take place next month, that it had offered its minority shareholders R5,50 a share.
Putco`s share price had been hovering at about R5,70 a share and the buy-out offer raised eyebrows. Transport analysts doubted if the minority shareholders would accept the offer.
Defending the company`s decision, MD Michael Oldham said yesterday that the offer was fair and reasonable. He said the rise of Putco`s share price to up to R7,50 earlier this year `was an anomaly`. He said the announcement of discussions about an empowerment deal lifted the group`s share price.
A transport analyst, who declined to be named, yesterday rejected Putco`s explanation, arguing that the offer was too low.
He said the minority shareholders were likely to reject it and he did not understand why the company offered R5,50. `They have enormous assets,` he said.
Oldham urged shareholders `to look at the future`.
He said failure to conclude a deal that would involve a black economic empowerment partner would have a negative effect on the company`s future.
Subsidised government transport contracts constitute Putco`s core business. And government`s policy requires that transport companies with which it deals have a 35% black ownership to qualify for tenders.
Oldham said if the transaction did not go through, Putco could be left `high and dry, with no access to government contracts`.
The restructured Putco will see empowerment groups Safika and DEC Investments holding 28% and 5%, respectively.
The restructuring, which is expected to be completed by the end of the year, would dilute major shareholder Carleo Enterprises` stake from 52% to a maximum of 33%.
As part of the restructuring, a yet-to-be established Employee Share Trust will acquire between 16% and 20% while the company`s executive management will hold the other 14%.
In terms of the proposed scheme, on which the shareholders will vote on July 20, minority shareholders can either accept the R5,50 offer or opt for reinvestment in the `new` Putco
