Christo Wiese. Picture: BLOOMBERG
Christo Wiese. Picture: BLOOMBERG

The share price of investment company Brait was on track for its worst day in four months on Wednesday, after it announced a rights issue representing more than half its market capitalisation.

Brait, whose largest shareholder is Christo Wiese, intends to launch an equity capital raise of up to R5.6bn, seeking to address debt problems and aiming to ultimately return cash to shareholders.

The issue includes an up to R350m specific issuance to Ethos Private Equity, the company’s new advisory partner.

The company’s share price slumped as much as 13.5% in morning trade on Wednesday, putting it on track for its worst day since July.

The company, which is facing a more than R6bn repayment on convertible bonds in September 2020, has reached an agreement to refinance its revolving credit facility to R7bn facility with a three-year tenure. This will fall to R6.3bn after the rights issue.

Ethos will enter into a co-operation with Titan after the recapitalisation. This follows Titan and Mergence Investment Managers entering into a voting-pool arrangement in September.

Brait will also get a new board after the recapitalisation, which is expected to be concluded in February 2020. John Gnodde, CEO of Brait’s current corporate adviser, will step down.

“The aggregate amount of the recapitalisation, of between R14.4bn and R14.7bn, provides a holistic solution for Brait to enable the redemption of the existing £350m [R6.65bn] convertible bond maturing in September 2020, as well as refinancing the group’s revolving credit facility for a revised three-year tenor,” said Brait chair Jabu Moleketi.

“The board believes that the recapitalisation and the new adviser agreement, provides Brait with a strong platform from which to focus on maximising value through the realisation of assets in the portfolio over the next five years and returning capital to shareholders,” the company said.

Brait reported on Wednesday that the group’s net asset value per share declined 9% to R38 in its six months to end-September, with the group’s loss for the period narrowing to €90m (R1.47bn) from €216m previously.

In morning trade on Wednesday Brait’s share price pared losses, and was down 10.61% to R14.75. Its share price has lost 50.83% so far in 2019.

The company had a market capitalisation of R7.71bn on Wednesday morning.

gernetzkyk@businesslive.co.za