OWN CORRESPONDENT and REUTERS, Johannesburg | Friday
JOHNNIC Communications, which is preparing to bid for South Africa’s second fixed-line telephone licence, has raised R3.8bn from a rights offer to consolidate control of acquisitions and eliminate debt.
The offer, which was 78.78% subscribed, saw more than R800m rand raised from minority shareholders, with the balance being taken up by Johnnic Holdings, which underwrote the offer. Johnnic Communications is majority owned by Johnnic Holdings.
Johnnic group CEO Paul Edwards described the offer, which was one of the largest capital raising ventures on the Johannesburg Stock Exchange in the past year, as “a perfect result for all parties.”
Johnnic said the funds will be used to service a R1.3bn debt incurred when the group acquired 126.7 million M-Cell shares last year and a further 75 million shares from transport parastatal Transnet to consolidate its control in the cellular network provider.
Edwards said Johnnic underwrote the offer to increase its stake in Johnnic Communications and use its R3bn cash pile from the liquidation of its non-core assets.
“Johnnic Holdings has contributed exactly R3bn and increased its stake in Johnnic Communications to 62.5%,” said Edwards.
He said the injection of fresh capital positioned Johnnic Communications for continued growth, adding that the company is currently trading at around a 30% discount to net asset value because it is highly illiquid.
“We have now consolidated our control of our largest and most important asset, M-Cell/MTN … eliminating over R5bn in debt since January last year,” said Edwards.