LETTER: What is the value of EL Bateman?
After 69 years on the JSE, the company is set to delist from the local bourse but without an audit
On September 15, shareholders of 129-year-old EL Bateman will be asked to approve its delisting from the JSE after 69 years, and minorities offered R2 a share. But even without 90% acceptance at this meeting, the resolution passed in May 2020 to authorise the sale of unissued shares could enable any dissenting minorities to be eliminated next time.
Apex Partners, headed by Charles Pettit, founder of Torre Industrial, recently acquired 19.6% of the shares at about R8 a share, and has in effect secured control of the company. Apex has an irrevocable voting agreement with Visio Fund Management, Laurium Capital, The Capital Incubator and, surprisingly, Tanjo One, so perhaps there is a pot of gold somewhere.
In June 2019, the reported net asset value was R17.57 a share, and R13.96 in December 2019. The Gamsberg contract has been completed, the Australian subsidiary has been sold, and the engineering division is in business rescue. The company has in effect been closed down. The experienced management have left, and in May 2020 the company repurchased the 3-million employee scheme shares at between R13 and R33 a share.
However, to evaluate the buyout price, Moore has reached a negative valuation of between R5.70 and R4.80 a share. Its calculation in April 2020 had been between R3.76 and R5.79 a share.
In May 2020, the auditors (KPMG) resigned, citing “increased risk profile as a result of the current restructuring process that is under way”. New auditors have been appointed. But no audit! Instead, “reviewed” audited financial statements will be issued a week before the meeting at which shareholders (except Apex) are to be offered R2 a share.
Are we to witness the delisting of yet another company from the JSE just one week after the reviewed (not audited) financials appear?
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