Brait to raise R5.25bn in share sale amid recapitalisation drive
Brait unveiled a deeply discounted R5.25bn share sale on Thursday, part of a sweeping overhaul of the Christo Wiese-controlled investment holding company grappling with weak demand and high borrowings.
Brait is in the middle of a big organisational shake-up that also involves a blanket sale of assets including the highly coveted gym chain Virgin Active and the introduction of a new strategic investor, Ethos Private Equity.
As part of the plan, the company, whose ill-fated acquisition of British high street retailer New Look wiped about 90% off its market value over the last five years, will sell 795-million new share at R6.60 each, a 48.6% discount to Monday’s closing price.
The money will be used to repay the remaining £170m (R3.2bn) worth of bonds due in September, and to partially repay Brait Mauritius’s existing, committed, revolving credit facility, the company said.
“As part of the overall recapitalisation, this provides Brait with a degeared balance sheet and extended debt maturities, providing an opportunity to drive value in its core portfolio of assets,” the statement reads.
The strategic shake-up, a portion of which was first reported by Business Day, is an attempt by its biggest shareholder, Wiese, to salvage value for Brait after a large portion of his fortune was lost after one of his companies, Steinhoff, uncovered accounting fraud that sent its stock crashing.
Wiese’s company Titan has agreed to renounce part of its entitlements to the new shares, worth R1bn, in favour of Ethos, a move that would cut the billionaire’s 40% holding in Brait and introduce Ethos as a strategic shareholder.
Titan will invest R1bn via a combination of following its rights and underwriting new shares not taken up under the equity cash call, while Ethos’s investment is expected to be as much as R1.35bn.
Other big shareholders have irrevocably committed to follow all or a portion of their rights and invest R1.378bn, and FirstRand’s Rand Merchant Bank has agreed to underwrite R1.522bn of the rights offer.
The share sale is about 63% of Brait’s market value.
Brait’s shares closed down 0.39% to R12.80, giving it a market capitalisation of about R6.727bn.