Resilient’s plunge hits staff in their pockets
The now-discouraged practice of lending workers money to buy shares has increased Resilient’s commercial risk
Until early January 2018, Resilient employees were laughing all the way to the bank. For years, the property company lent its workers loads of money to buy its own shares. But with the sharp drop in the value of Resilient’s share price, employees’ life-enhancing profit on their share investment has turned into a life-destroying loss. The debt on the 8.4m outstanding shares in the employees’ share purchase scheme is approximately R630m. That wasn’t a problem when, by June 2017, this debt was comfortably covered by the shares, which were valued at just over R1bn. But at the end of March 2018 the value of the shares had slumped to R419m, about R210m short of the debt that’s owed. These figures help explain why lending money to employees to buy shares has fallen out of favour. High-profile reports critical of Resilient, and released in January, touched on the possibility that the company used employee share purchasing to bump up the share price. "In general it’s regarded as bad practice...
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