| Mon 8 Aug 2005, 10:08 | | Hosken sweetens offer as Johnnic plays hard to get |
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Hosken sweetens offer as Johnnic plays hard to get
Ron Derby
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Media Correspondent
GAMING and media group Hosken Consolidated Investments (HCI) has sweetened its offer for rival Johnnic Holdings, in a move it hopes will end the feud between the two groups.
HCI increased its cash offer for Johnnic by 95c to R10,70 a share on Friday.
A share option, which the group introduced last Monday, was also increased, to one HCI share for every 2,57 Johnnic shares held, compared with the previous alternative offer of one to every 2,821 Johnnic shares.
ôHCI is hopeful that it (the revised offer) will bring to an end to any hostility that may have pertained between Johnnic and HCI,ö HCIÆs CEO John Copelyn said.
Johnnic CEO Christine Ramon said the offer needed to be considered by the Johnnic board. She indicated, however, that it would still fall short of expectations. ôPwC (PricewaterhouseCoopers) must still come out with its recommendation,ö she said.
The Johnnic board appointed PwC last month as an independent adviser on HCIÆs mandatory offer to acquire the remaining shares in Johnnic it does not already own. HCI has 40% of Johnnic.
On Friday, HCI said it had received irrevocable commitments from investors holding 5,16-million shares or 3% of Johnnic.
Ramon said the new cash offer was still below the price the board felt was fair. The boardÆs June valuation was R11.
Ramon said it was difficult to comment on the share alternative as HCI was a tightly held and illiquid share. A maximum of 15-million HCI shares will be issued at R27,50 apiece. HCI shares currently trade at R32,50.
Copelyn said Johnnic shareholders would be given an opportunity to retain an exposure to JohnnicÆs existing assets and gain exposure to HCIÆs assets on what HCI believes to be fair and reasonable terms.
Ramon said Johnnic shareholders would have to wait for the boardÆs decision in the week of August 15.
HCI upped its stake to 40% in Johnnic by acquiring close to 10% from Gold Reef Casinos last month.
Johnnic and HCI are involved in a tussle for the control of Tsogo SunÆs 51% parent company, Tsogo Investment Holdings (TIH), which owns Montecasino and the Southern Sun hotel group. SABMiller owns the remaining 49% and has said it was willing to sell it, at the right price.
HCI has 51% of TIH and Johnnic 19%.
As a result of the conflict, Johnnic shareholders in June rejected the appointment of three HCI bosses ù Copelyn, Marcel Golding and Elias Mphande ù to its board. The next day, HCI increased its stake to 40%, which triggered the mandatory offer.
Last month HCI said it would support Gold Reef Casinos if it bid for all the shares in Tsogo Sun.
While supporting a Gold Reef offer, Copelyn said the group had no desire to exit the asset. ôWe would not be paid in cash for our shares, but rather through shares in a merged Gold Reef and Tsogo.ö
Johnnic was created in 1996 under the National Empowerment Consortium. In December 2002 the group unbundled its shares in MTN and in March this year it separated from Johnnic Communications (Johncom).
