ON THE MONEY: African Bank preference shareholders may be outmanoeuvred on capital payback
The decision to pay a dividend, or refund the capital, is now in the hands of the ordinary shareholders, writes Stuart Theobald
Preference share investors in the holding company of the old African Bank, which renamed African Phoenix Investments Limited started trading again last week on the JSE, are in a pickle. The ordinary shareholders in the business have their hands tightly around their throats. In better days, the preference shareholders had contributed R1.13bn of capital to what was then a bank holding company. Now, the decision on whether to pay that back is entirely in the hands of ordinary shareholders. The company has value, providing some relief to the shareholders who thought they lost everything when the bank collapsed in September 2014. The ordinary shares traded on Friday at 45c, a premium on the 31c it last traded at before being suspended from the JSE — though a fraction of the R39 a share peak reached in 2012. That closing price gives the company a market capitalisation of R675m.The preference shareholders, who would normally rank ahead of ordinary shareholders in a liquidation and therefor...
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