BUSINESS DAY TV: The JSE is about to reel in another catch in Sea Harvest
Mustaq Brey is the CEO of Brimstone.
BUSINESS DAY TV: The JSE is about to reel in another catch. Brimstone plans to list its seafood company, Sea Harvest and says the cash raised will help to reduce debt and grow the business even more. Brimstone’s CEO, Mustaq Brey, joins us now on the line for more insights.
Mustaq, as you say in today’s announcement you’ve spent 19 years building up your stake in Sea Harvest, why reduce it now?
MUSTAQ BREY: We’re not reducing our investment in the company. What we’ve done in actual fact is listing off the Sea Harvest. We’re not taking any money off the table. We are trying to raise up to R1.5bn which will assist us in doing some other things as well at Brimstone, and at the same time it allows us to bring in some additional shareholders into Sea Harvest.
We’ve been there for a long time, we’ve been there for 19 years. Over a period of time we’ve seen a few major changes, starting off at 10.76% up to 21.5% and then, when Tiger left Sea Harvest, we gained control of the company with Kagiso Investment Trust. Last year we took Kagiso out and we’ve had a long run with that and we believe it’s the right time right now to bring Sea Harvest to the market.
BDTV: You do say you’ll keep 52% post this transaction and you do intend to keep your stake above 50%, so 50.1%. Staff hold another 15%, so is it fair to say that you’re going to be selling about a third of the business to investors.
MB: That’s correct, yes.
BDTV: For R1.5bn so that would value Sea Harvest at potentially R4.5bn, if you get your price.
MB: Yes, but part of what we’re doing at the moment, is from the R1.5bn which we’re raising we’re going to be settling debt of about R300m in Sea Harvest, and will also repay R575m back to Brimstone, which is in there are the moment with pref shares and loan accounts owing to Brimstone — and then also have a pot available to go and do some other transactions.
BDTV: So it’s being done through a private placement of your shares. Have you been sounding out investors, what’s the interest in Sea Harvest?
MB: Surprisingly, our advisors have taken some people over it all and they’ve met with them and spoken with them, and there seems to be quite keen interest. They’re now awaiting the final documentation, which is with the JSE at the moment, which will go out to potential new shareholders.
BDTV: We also have African Empowerment Investments perhaps beating you to that catch because it’s listing Premier Foods and Fishing on 2 March, so it will be on the JSE before you. Does this take some of the limelight from some of the investment case away from Sea Harvest?
MB: I don’t think so, but believe it will in actual fact assist us if there are a couple of other fishing companies on the JSE. I don’t think it’s an issue at all and don’t see that as real competition that they’re one-up on us. The company we’re bringing to the market is also substantially bigger than the one they’re bringing to the market.
BDTV: You did say that you plan to pay down debt, also fund growth? Some of that organic growth and you have been spending on vessels and infrastructure and the like. Do you see opportunities for acquisitions in the market at the moment and would they be South African acquisitions — or would you be looking further afield, as you did with Australia?
MB: Probably both, we would probably do a bit of both. There are definite opportunities available both locally and overseas and, if the company is at the right place at the moment with the right amount of capital, and we can certainly go ahead and do a few more of those things.
BDTV: When would you expect this all to be completed, because your shareholders still have to vote on this and I suppose you still have to go through some other hurdles — when would you expect to hit the JSE?
MB: The JSE, the last 10 days of March, that’s our target date at the moment. There are some regulatory hoops we’ve got to go through but we are busy getting all of those sorted out and hopefully we’ll get it done in the last 10 days of March.
BDTV: It’s always good to have more choice on the JSE. We look forward to chatting to you closer to the time.
Mustaq Brey, CEO of Brimstone, discusses why the company is listing Sea Harvest and reducing its stake after building it up for the past 18 years.