OFF-MARKET HEDGE
Dis-Chem director dealings raise eyebrows
When is it okay for a company director to bet against his own stock? On Wednesday, Dis-Chem prompted lively criticism on social media when it announced that chief financial officer Rui Morais had used slightly more than 4.1-million of his shares to enter into an off-market hedge. Responding to the news, RECM chairman Piet Viljoen tweeted: "Directors of Dis-Chem hedging exposure to their own shares. Not a good sign for this highly priced market darling." In the case of Morais, who in a second leg of the deal bought almost R50m worth of Dis-Chem stock, the answer may be: sometimes. He defended his decision as a "really positive" step that reaffirmed his commitment to the company. Representing just more than a third of his shareholding in the company, the structure has a put strike price of R27.01 and a call strike price of between R38.29 and R39.25 a share, and expires between May and September 2021. Essentially, it is a mechanism to raise capital: a director gives shares as collatera...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.