Johnnic Holdings is unbundling its entire 62,5% shareholding in its media and entertainment subsidiary, Johnnic Communications.
In terms of the proposal, Johnnic shareholders will acquire a ratio of 39,10 Johncom shares to every 100 Johnnic shares held.
The unbundling comes after the company’s board decided the hotel and gaming sector would be Johnnic’s new area of focus.
”The main considerations for the group in deliberating its future were its strategic direction in seeking new investments in growth sectors and the enhancement of its empowerment credentials following the expiry of the National Empowerment Consortium voting pool agreement in December 2003,” the company said in a statement on Wednesday.
”After careful deliberation and consideration of the restructuring proposals submitted by various parties and mindful of the strategic direction of the company as identified by the board, the independent committee, which Johnnic appointed to ensure impartiality, in consultation with various stakeholders has concluded that the hotel and gaming assets under Johnnic and the media assets under Johncom do not represent a strategic fit. As a result the market was unlikely to place full ratings on the Johnnic/Johncom assets under a single group with a single point of
entry for investors,” the statement explained.
Johnnic said it anticipated the unbundling would unlock most of the discount at which Johnnic shares were trading relative to their underlying net asset value.
The move would also enable shareholders to hold shares directly in Johncom and collapse the pyramid structure that existed between the two companies on the JSE Securities Exchange.
Commenting on the restructuring, Johnnic acting chief operating officer Christine Ramon said the unbundling forms part of the company’s strategy to reposition itself as a strong player in the hotel and gaming industry.
”Our strategy going forward will be to build up critical mass through making value-adding investments in the hotels and gaming sector in particular,” she said.
”Our recent investment in Fabcos Investment Holding Company, giving Johnnic an effective 9,7% stake in Tsogo Sun Holdings, and our existing stake in Suncoast Casino are part of an on-going strategy to increase our presence in this sector. We are currently working with our advisors to identify suitable additional investment opportunities,” Ramon added.
The R1,3-billion cash raised through the company’s recent disposal of its remaining 40-million shares in MTN may be used for the implementation of its growth strategy. – Sapa