Lately I have taken to flinging my tennis racquet. It’s fine to introduce a little petulance on a Monday night hack around with your mates. But on Saturday, in a first-team mixed league game vs a combative Claremont, I whipped my favourite Head racquet across the court and into the fence.
This despicable display came after losing a long rally with a lady that looked nothing like a brick wall but certainly did a most convincing imitation of that solid structure. I did this in full view of a bunch of youngsters and their parents making their way, I was told later, to a dance at the nearby Herschel school. They chortled; I fumed. I may have kicked the offending instrument.
I stopped hurling racquets at the tender age of 11 when my dear Aunt Ida, a formidable sportswoman and the much-needed authority figure in my childhood, read me the riot act after I had planted my Dunlop Maxply on the clubhouse roof. I’d blown a huge lead in the under-12 semifinal, and someone had the gall to cheer my opponent. My sudden throwback to childish tantrums is most irksome, not to mention worrying. Perhaps it’s high time I came to terms with my fallibility and frailty. Trying to grind out wins at the cost of a calf, knee, shoulder, neck, wrist and (lately) elbow seems futile and masochistic. I also don’t enjoy the great bank of bitterness that descends on me as I sip a Black Label and diclofenac cocktail, watching my three younger teammates — whose collective years don’t even tally to my age — doing handstands on the artificial turf.
Surrender seems inevitable. With that in mind, I wonder how much fight there is left in dogged activist investor Albie Cilliers (also, I believe, a formidable competitor on the tennis court). Cilliers has been punching well above his weight in the drawn-out slugfest at property investment counter RMB Holdings (RMH). Some market watchers reckon that the 47c a share buyout pitch from AttBid, an entity aligned to unlisted Atterbury Property, will take out most minority shareholders in RMH. That’s quite possible, especially since RMH’s independent board supports the deal. The offer price is also pitched just a fraction away from the last stated NAV of 47.5c a share — so, on paper, the buyout is framed reasonably.
But that’s half the story. RMH last year heavily impaired its main investment — which happens to be a 38.5% stake in Atterbury. The value of this investment was written down by a chunky R272m to R662m. The writedown would seem odd to a casual observer, noting the generally improved sentiment for property companies (as reflected across share prices in the JSE’s real estate sector) as well as the lower interest rate environment. The writedown, however, was premised on a rejected offer made by Atterbury for RMH’s stake in it. Since that offer was lower than the value reflected on RMH’s financial statements, it was deemed an “impairment indicator”.
It is incredibly difficult not to conclude that minority shareholders are being screwed
In retrospect, that lowball offer for the Atterbury stake has considerable bearing on AttBid’s buyout offer for RMH, given that RMH’s NAV was 66c a share at its pre-impairment value. There is, admittedly, an argument to be made that Atterbury at this point is effectively the only buyer for RMH’s stake in the property company. I don’t think buyers would be lining up to hold a large minority stake in an unlisted property company without a compelling strategic rationale.
The point, though, is that perhaps RMH did not have to go in such a mercenary direction where it is incredibly difficult not to conclude that minority shareholders are being screwed. Once the RMH structure is collapsed by Atterbury, the underlying NAV is released to Atterbury with considerable uplift potential. Let’s also not forget the assessed tax losses inside RMH.
What were the alternatives? Atterbury could conceivably have used RMH to effect a reverse listing. Presumably being in the public eye on the JSE did not appeal to the prime movers at Atterbury. It would be naive, I suppose, to have expected Atterbury — which late last year snapped up Coronation Fund Managers’ stake in RMH — to at least pitch an offer in the mid-50s, if only to recognise the much-improved fundamentals for local property.
So back to Cilliers, who, at last count, spoke for 15% of RMH. Does he reject the offer? If Cilliers resists the buyout advances, then — according to JSE rules — Atterbury cannot delist RMH (this requires the support of 90% of shareholders). This means at least another year in the public eye before Atterbury can contemplate a further offer to buy out remaining minorities. I don’t know that Cilliers is a man for blanking out the pain with beer and an anti-inflammatory or three, so I expect a keen scrap right down to the wire. And strength to his hand, I say.
Once again, though, the takeouts from the RMH saga are quite depressing. Can investors ever trust NAV figures (see my recent column on investment company Trematon Capital Investments), and can they trust an independent board not to sell everyone out cheaply?
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