Bruce Whitfield
Omega Holdings, majority shareholder China’s Shanghai Industrial Investment Corporation (SIIC), is offering minorities 8c a share and is planning to delist the ailing company, which it says will be out of business by September unless it gets the approval it needs for the takeover.
Omega, which listed on the Johannesburg Stock Exchange in 1987, was a one-time darling of the market and had a good 10 years, but things started going wrong in the mid-1990s.
Omega had anticipated a far greater post-apartheid economic upswing. They’d anticipated the South African government’s housing programme would go more quickly than it has, and that people would be spending far more on household electronics products. It gradually lost its lustre and main brands. The end was in sight when it lost the Toshiba, Panasonic and TDK agencies.
In July last year SIIC was granted an option to buy 350-million new shares at 10c each, in exchange for standing surety for Omega’s banking facilities. That would have given SIIC 90% of the company it first invested in in 1998 when South Africa opened formal diplomatic ties with China.
SIIC says it will not be exercising that option and instead is planning to buy back nearly 46-million shares at 8c each, a 100% premium on the current share price.
The company has run up debts of R200-million since SIIC made its first investment, despite several attempts at restructuring the business.