Trustco founder and MD Quinton van Rooyen. Picture: RUSSELL ROBERTS
Trustco founder and MD Quinton van Rooyen. Picture: RUSSELL ROBERTS

Namibian investment company Trustco, which, earlier in June, raised eyebrows with its financial report, says it has entered into a derivative agreement that could result in a N$2bn (R2bn) capital raise and improved liquidity of its shares.

Trustco said on Thursday that it had entered into a warrant agreement with Evo Fund, which could see the company issue new shares. Warrants give the holder the right, but not the obligation, to buy shares at a certain price within a specific timeframe.

The agreement will also increase the trading volume and liquidity of Trustco shares, allowing it to “meet various index liquidity requirements”. This could “aid in the price discovery of the company’s shares”.

Funds raised would be used to “unlock further opportunities and optimise current operations in the resource segment”, to fund acquisitions, cut debt and “ensure the banking and finance segment is well capitalised”, Trustco said.

Earlier in June, Trustco reported that profit after tax more than doubled in the year to end-March. “The group’s diversified business model, both in revenue streams, geographical regions and asset spread again proved its worth,” Trustco said at the time.

However, the company’s statements showed that revenue was boosted by a N$984.4m “transfer of inventory to investment property” gain. This stemmed from a decision not to develop properties previously bought for that purpose.

Meanwhile, net profit was boosted by an income tax benefit of N$119.1m, compared to a gain of N$32m the previous year, and the company also recorded a loan-waiver gain of N$545.6m.

Trustco said on Tuesday that it had noted “the ill-informed opinions of some commentators who have maliciously labeled the reclassification as unethical or insinuated similar practices to recent corporate failures in SA. Responsible commentators will rectify their misleading statements without delay."”

hedleyn@businesslive.co.za