The KAP Industrial share price closed marginally stronger at R8.56 on Tuesday following an announcement by Steinhoff that it had successfully placed 450-million shares at R8.15 each.
The placement, which Steinhoff said was "multiple times oversubscribed", raised about R3.7bn for the cash-strapped retail group. The proceeds will be used to redeem or repay debt within Steinhoff’s South African subsidiaries. The placed shares represented a big chunk of Steinhoff’s 43% holding in KAP.
The KAP share has been in a volatile trading pattern since Steinhoff warned shareholders of accounting irregularities in early December. Although Steinhoff was not involved in the management of KAP, its holding was considered sufficient reason to cause some contagion.
Traders said the share has been under pressure since early December as the market realised a sale by cash-strapped Steinhoff was inevitable but it was concerned about the manner it would be implemented.
In a Sens statement released on Tuesday morning, Steinhoff said KAP had created material value for Steinhoff shareholders since 2012 when it acquired a significant stake in KAP in exchange for industrial assets.
The sale will reduce Steinhoff’s holding in KAP to a still considerable 26%.
"Steinhoff continues to view KAP as a compelling investment case, especially in view of recent events in SA and the prospect of improving economic conditions," said Steinhoff.
The amount Steinhoff raised from the KAP share sale
At the end of January Steinhoff offloaded 29.5-million of its PSG shares. It managed to place the shares at R240 each, which some traders said was too low for a quality stock like PSG. The share price initially bumped up to a high of R275 but since then has fallen back to a current level of R229.
Meanwhile, some Steinhoff shareholders have expressed frustration that the company’s recent announcement that it would hold its annual general meeting on April 20 did not provide sufficient time to prepare and present questions to the chair.
The annual meeting, which will be held in Amsterdam but will have a satellite link to a Cape Town venue, is expected to be a heated affair.
Some shareholders are concerned that directors recently appointed to the supervisory board are too closely aligned to individual shareholder groups and will not represent the general body of shareholders.
There is also growing concern about the uncertain length of time that PwC has been given to investigate the accounting irregularities.