MARIAM ISA AND OWN CORRESPONDENT, Johannesburg | Tuesday
SOUTH African banks are unlikely to be badly hit by the impending collapse of LeisureNet, the country’s biggest health club operator, but a Cape Town black empowerment company has shed 44% of its share price after five directors resigned.
The share price of Sekunjalo Investments dropped 8c to end the day at a record low of 10c, having slid steadily from more than 200c in May last year and 100c a year ago.
A source close to the company said the five non-executive directors – Lieb Loots, Selwin Lewis, Mary-Jane Molifi, Keith Roman and Vines Gihwala – resigned at a board meeting last week in a vote of no confidence in CEO Iqbal Surv.
Surv said the drop in the Sekunjalo share price and uncertainty over how much of the group’s R105m direct investment in LeisureNet could be recovered was an “emotional issue” for the board. He conceded that there was “some divergence of opinion” over how the LeisureNet stake should have been managed, and said some people “might want to go”.
Shares in several domestic banks which had lent money to the operator slid by more than one percent.
But analysts said this mainly stemmed from uncertainty in the absence of any official debt breakdown and no domestic lenders were likely to be forced to boost loan provisions to the point where it had a significant impact on their earnings.
“All the local banks have exposures but … it’s not really significant and can be easily handled,” an analyst who wished to remain anonymous said. “The big exposure is with international operations which was financed by international banks.”
Analysts have estimated that LeisureNet’s total debt stands at around R600m, with around one third of that amount owed locally.
Business Day newspaper said that Leisurenet owed Nedcor – South Africa’s most highly rated commercial bank – and the International Bank of SA R240m from interest-bearing debt of about R390m.
Another creditor, financial services giant Investec, put its LeisureNet exposure at R40m, with half secured directly against bond and lease agreements while the rest was held through other entities.