Bulelani Ngcuka. Picture: TYRONE ARTHUR
Bulelani Ngcuka. Picture: TYRONE ARTHUR
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A number of Buildmax’s senior officials including Bulelani Ngcuka, a former ANC heavyweight, has put together a new company to launch a takeover bid for the whole of the mining contracting group.

The cash offer for the company engaged in contract mining and other services in the mining sector was pegged at 15c per share, a price that the company had last touched briefly towards the end of July 2017. In the year to date, Buildmax’s shares had grown by nearly 32% to 25c on Wednesday.

The shares fell hard on Thursday to 15c, a 36% decline.

Nonexecutive director Ngcuka, a former national director of public prosecutions, is a cofounder of Vuwa Investments, one of the black empowerment entities in Buildmax. Vuwa owns 6.75% of Buildmax and  is acting in concert with the group making the offer. Justin Colling, Buildmax’s CEO, who is also acting in concert with the new company, owns 10% of Buildmax.

If the bid is approved and recommended by Buildmax’s independent nonexecutive directors after a study of the deal by BDO Corporate Finance, the intention is to delist Buildmax from the Johannesburg bourse.

The timing of the offer was prompted in part by key shareholder Brait’s investment. Its 40.5% stake was reaching the end of its fund life and Brait needed to dispose of it.

Brait has given its support to the proposal, as has Coronation Asset Management.

At the end of its interim period in August 2017, Buildmax’s current liabilities exceeded its current assets. However, it said all its opencast mining contracts were profitable and delivering predictable cash flows.

The new company’s management would have "significant financial exposure" to Buildmax and has locked itself in the company for five years.

seccombea@bdfm.co.za

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