| Thu 2 Dec 2004, 12:32 | | Johncom stands on own feet as Johnnic sheds shareh |
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Johncom stands on own feet as Johnnic sheds shareholding
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Unbundling collapses pyramid, unlocks value
Consumer Industries Editor
CAPE TOWN Johnnic Holdings will unbundle its 65,1-million shares in Johnnic Communications (Johncom) to unlock value in Johncom, collapse the pyramid holding structure through which it controls the media group, and improve the free-float of Johncom shares, the group said yesterday.
This move will create two separate listed groups, one focusing on hotels and gambling and the other on media and entertainment.
Johnnic shareholders will receive 39,10 Johncom shares for every 100 Johnnic shares they hold, subject to shareholder and regulatory approvals. After the unbundling, Johnnic will be classified as a cash company by the JSE Securities Exchange SA and given six months to acquire viable assets. If it cannot do so, it will consider returning cash to shareholders.
Visio Capital fund manager Patrice Moyal, who was strongly critical of Johnnic`s recent sale of its remaining MTN shares without specific shareholder approval, said yesterday it was now clear that the sale was necessary for Johnnic to raise cash to pursue gambling opportunities by increasing its stake in Tsogo.
He said the unbundling decision had unlocked considerable opportunities in Johncom, particularly as it removed the control structure.
Currently, Johncom`s market capitalisation reflects only its stakes in MNet/Supersport and Caxton. That means there is no value ascribed to its other media and entertainment assets, which include The Sunday Times, Sowetan, Exclusive Books and 50% of BDFM, the company that publishes Business Day.
Nedcor Securities head of nonmining research Peter Armitage said Johnnic`s unbundling was very positive for Johncom as it would enhance Johncom`s liquidity.
Johnnic`s latest move reflects a continuation of its evolution from a company that once formed part of a mining conglomerate.
Its roots are in Johannesburg Consolidated Investment Company (Johnnies) which was founded in 1889 and evolved into a substantial mining and industrial conglomerate. In 1995 Johnnies restructured into three separate businesses Johnnic, an industrial company; a platinum/diamond company, Anglo American Platinum; and a gold and other mining company, JCI.
In 1996 black empowerment shareholders the National Empowerment Consortium were introduced to Johnnic and two years later new management decided Johnnic would become a focused telecommunications, media and entertainment group.
In line with that strategy, it made its first gaming investment, with the acquisition of a gaming licence in KwaZuluNatal, and also bought Gallagher Estates. It started to build up its stake in MTN, which proved to be one of its most lucrative investments.
The following year it sold its noncore assets, including part of its stake in South African Breweries, Metro Cash & Carry, Edgars and Adcock Ingram, to reduce debt. Four years ago Johnnic became Johnnic Holdings and Omni Media became Johnnic Communications .
Johnnic`s results for the six months to September benefited from a significant turnaround in its largest investment, Johncom, as well as higher income from gambling and its conference venue, Gallagher Estate.
Revenue from continuing operations rose 52% to R2bn compared with pro forma figures for the same period last year.
