Trustco, phew. I’d be genuinely gutted if this Namibian investment company followed through on its plans to delist from the JSE. The bourse would be a lot less interesting without it.
A month for Trustco trumps a lifetime for most listed counters, even with the share currently suspended. Over the past two years or so there’s been a plethora of proposed and executed transactions — ranging from exiting commercial banking, introducing an anchor investor to part of its diamond mining interests and bringing in big money from the Riskowitz Value Fund to a significant buyback of shares from an investment entity associated with the Notre Dame University in the US. Then there were plans for a “reverse share split” (basically a share consolidation) and a proposal to list on the Nasdaq.
Never a dull moment. As things stand, Trustco’s shares have been suspended on the JSE as the group has been unable to publish its audited accounts for the year to end-August 2024. As pointed out in last week’s editorial, Trustco also plans to delist from all the bourses — including the JSE — where its shares are listed.
I’m sure opportunistic investors in Trustco, especially those who scrambled for shares at the pre-suspension 30c-40c range, would be dead keen to gauge — and, indeed, assess for themselves — the latest NAV figure. Unfortunately the lack of up-to-date financial information leaves shareholders in the dark, especially with a chunk of Trustco’s value and prospects tied up in a diamond sector that now looks deeply flawed.
Personally — and presuming Trustco shares were circulating in a private over-the-counter market — I would not take even the smallest punt without having sight of something resembling up-to-date financials. Others clearly think nothing of being inconvenienced by very belated financial results.
Trustco shareholders, I’m sure, would have been surprised to learn last week that the group’s main shareholder(s) have received an offer on their shares. According to a press statement, the founding Van Rooyen family and CEO Quinton van Rooyen have received a “private acquisition offer” from VeldBridge Holdings, a Cayman Islands-incorporated investment company.
Those scurrying to the VeldBridge website will be bitterly disappointed. “Rooted in the veld”, it proudly declares, but at the time of writing no directors or management team were listed. There appears to be no portfolio of existing investments or track record of previous investments. The website does declare, though, that VeldBridge “specialises in identifying and acquiring undervalued assets across Namibia and the broader African continent ... We target opportunities overlooked by international markets while positioning for a future Nasdaq listing to provide our shareholders with enhanced liquidity and global market access.”
Hmmm, so Trustco will, in a roundabout way, take another tilt at the Nasdaq. It has to abandon its Nasdaq listing ambitions so VeldBridge can “pursue its own international listing strategy”.
I also harbour great hopes for the Namibian economy – based on serious oil and gas discoveries, the green hydrogen thrust and prospects for new metals and minerals
I also harbour great hopes for the Namibian economy — based on serious oil and gas discoveries, the green hydrogen thrust and prospects for new metals and minerals. I have for many (many) years held shares in Nictus, a slightly less adventurous company than Trustco that trades across a number of consumer-centred sectors in Namibia. I guess Namibia might appeal to growth-seeking investors willing to bet on emerging markets.
But for a company with international listing ambitions, you might expect a little more information — particularly the prime movers and capital providers behind VeldBridge. One might lean to the cynical side, noting that Trustco at the time of suspension carried a market value of about R360m. But VeldBridge’s offer is not only for the greater Van Rooyen shareholding in Trustco … it also ropes in debt assets — including both interest-bearing and noninterest-bearing components, subordinated and first-ranked obligations, as well as secured and unsecured claims totalling R5bn (or $281m).
In essence VeldBridge (or any of its subsidiaries) would provide Trustco with access to up to $250m in debt financing at interest rates not exceeding 6.5% a year. On paper (and I stress “on paper”), this is a sizeable deal. VeldBridge has structured the offer through an equity exchange mechanism, offering Van Rooyen or his nominee more than 7.3-billion common shares and 5,000 series B preferred shares in VeldBridge.
What Van Rooyen’s stake in VeldBridge will be is not made clear. It is also curious that the transaction made its way to investors and the public via a media release rather than an official Sens announcement. As far as I can ascertain, Trustco was also not under cautionary notice — at least not one specific to the proposed VeldBridge deal. The group’s last Sens notice was a cautionary — but pertained to “working towards the subsequent steps pertaining to the delisting process”. I suppose that might well be open to interpretation.
So what now? The first thing would be to confirm whether VeldBridge’s offer to Trustco’s founding family will be extended to minority shareholders. I’m really not sure whether the reference to “private acquisition offer” has any bearing on normal majority buyout proceedings. It might be telling that Trustco’s board noted that VeldBridge is entitled to privately negotiate with any other Trustco shareholders to acquire some or all of their shares.
The board has also not been asked to provide a recommendation on the offer at this time. Still, it’s important to see what inferred price VeldBridge is tabling — remembering a last stated NAV of about 120c a share at the end of February 2024. The next few weeks are going to be intriguing. We should receive updated financials for Trustco — presumably including the interim numbers to end February.
More importantly, I’m sure the VeldBridge website will be duly updated and display all those finicky little details that astute investors require to make informed decisions.
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