Quinton van Rooyen’s Next move
Who will acquire the shares being peddled by family-owned vehicle after downgrade?
Namibian investment company Trustco will again raise eyebrows in the market with a novel proposal to rejig its balance sheet.
This week founder, CEO and major shareholder Quinton van Rooyen indicated a willingness to stump up as much as R1bn in loan funding for Trustco, which has been renegotiating its debt and was recently slapped with an ominous credit downgrade by Global Credit Ratings.
The much-needed funding line appears to hinge on Van Rooyen’s family-owned vehicle, Next Investments, selling a portion of its Trustco shares to investors, including institutions, individuals, corporates and existing shareholders.
Aside from Van Rooyen, Trustco’s major shareholder is the US-based Riskowitz Value Fund and a number of related party investment entities.
If the earnout clause attached to Trustco’s acquisition of diamond mining assets from the Van Rooyen family pans out, the family will own more than 1.16-billion Trustco shares, which represents a stake of 72.65%.
Officially Trustco reckons that after the proposed sale of a "relatively small portion" of the Van Rooyen family’s equity, the family will maintain its significant controlling interest in the group while the share float will be increased to the benefit of all shareholders.
Sources say it will be fascinating to see where Van Rooyen will place the shares, as institutional investors have mostly given Trustco a wide berth in recent years.
The big question is whether a Riskowitz-aligned entity — seemingly the only active buyers of Trustco stock — will acquire the shares being peddled by Next.
Trustco indicated that "each and any sale of any tranche of the family’s securities will be announced on SENS".
The loan, which will attract the prime interest rate, comes with flexible terms. Most notably, Next can elect to convert the loan into Trustco shares.
The staggered conversion option schedule suggests Van Rooyen is extremely bullish about Trustco’s future.
Between January 2020 and the end of March a portion of the loan can be converted at R21.49 a share based on a maximum issue of 46.5-million Trustco shares.
The following years envisage conversions at a rate of R31.91 a share, R42.72 a share, R57.93 a share and R74.79 a share.
Trustco’s share price recently peaked at R13.49 on the JSE.