Public Investment Corporation head Dan Matjila. Picture: SUNDAY TIMES
Public Investment Corporation head Dan Matjila. Picture: SUNDAY TIMES

Clarity is needed on the Public Investment Corporation’s (PIC’s) statement that it is working on a strategy to exit its billion-rand investment in Independent Media, and he will ask a question in Parliament about it if necessary, David Maynier, the DA’s finance spokesman, says.

Last week, Dan Matjila, CEO of the PIC, told the standing committee on finance that work had begun on a strategy to exit the investment, adding that it was a market-sensitive issue. However, PIC officials subsequently said Matjila was referring only to loans due to be repaid in 2018 and 2020.

Even the forced repayment of the R408m loan due in August 2018 could have crippling implications for Independent Media, given what the PIC has described as the group’s financial "underperformance".

The PIC has not responded to requests from Business Day for clarity on the "exit strategy". Maynier said on Friday he understood Matjila to be talking about exiting the equity  investment as well as the repayment of loans.

"A statement was made in Parliament about exiting the investment. If it’s necessary, I will ask a question in Parliament to get clarity on that statement," said Maynier, who had quizzed Matjila on the investment in the media group during the PIC’s presentation in Parliament.

Within hours of the presentation, the PIC placed a detailed schedule on its website of the names and money involved in its unlisted investment portfolio. There are about 108 entities, mainly companies, in the R67.9bn Isibaya portfolio.

The lead sponsor of the PIC’s involvement in Independent Media was Iqbal Survé, whose Sekunjalo group, with funding from the PIC, got control of the media group in 2013 when the former Irish owners sold out.

The PIC’s total debt and equity exposure to Independent Media is just less than R1.2bn. The bulk of this, just more than R1bn, is debt. The initial equity investment of R166m had been written down to R108m by the end of March 2017, indicating operating losses. A year earlier, the 25% equity stake had been valued at R142m.

Although the PIC has written down the equity, it has not impaired the debt. The R1bn debt represents the PIC’s March 2017 valuation of the R722m loan initially extended to the group.

The PIC did not respond to Business Day’s request for clarity on the appreciating debt.

The hefty R408m of debt due to be repaid in August 2018 will be stressful for the group.

The PIC explained the group’s underperformance by reference to the tough conditions in print media. "Decline in economic environment leading to lower advertising spend by customers and lower revenues for Independent Media," the PIC said.

Remarkably, two other media firms owned by Sekunjalo — African Media Development and African News Agency (ANA) — have been able to defy these difficult conditions.

ANA already has a value of more than $1bn. In addition to ANA providing a syndicated multimedia news service to Independent Media, African Media Development is providing many of the services previously performed in-house by Independent Media.

The PIC has not responded to questions about the possibility of conflicts in this situation, but it has described Independent Media’s governance as "poor" and said it lacked proper leadership. "The CEO position is still vacant, [and there is] constant restructuring as a result of a changing business model."

Neither the PIC nor Takudzwa Hove, an executive director on the Independent Media board, would comment on whether or not the changing business model was connected to the establishment of Survé’s other media operations.

Hove was also asked questions about the CEO position, but did not respond.

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