Trustco restructures debt, claims NAV will double
Moves are afoot at Trustco Group Holdings to reduce the group’s precipitous gearing, to inject operational cash and to convert existing debt to equity, pending shareholder approval.
In a notice published under the Stock Exchange News Service (SENS) on the Johannesburg Securities Exchange on Tuesday 16 January, Trustco warns shareholders to exercise caution when dealing in their shares since current ongoing negotiations may have a material impact on the group’s share price.
As part of the debt and equity restructuring, Trustco advised that one of its key investors, the US-based Riskowitz Value Fund is prepared to recapitalise the group up to N$950 million in exchange for a fresh issue of Trustco shares.
In turn, Trustco intends to increase its shareholding in Legal Shield Holding from the current 80% to just over 91% by taking over 11.35% of the company’s shares from the Riskowitz Value Fund. Legal Shield is the umbrella for the group’s insurance business and real estate portfolio.
“[The Riskowitz Value Fund] is committed to supporting dynamic enterprises in emerging markets and leveraging opportunities that drive mutual success,” said the fund’s Sean Riskowitz.
Further debt restructuring is proposed to increase the shareholding of the group’s founder, Dr Quinton van Rooyen, by converting existing debt of N$1.48 billion into new ordinary shares.
In a statement issued by the group on Tuesday, they said “This transformation of debt into equity is a proactive approach to debt management that unlocks free cash flows for future investment, frees up capital for dividends in the medium term, and more than doubles Trustco’s net asset value.”
Group Deputy Chief Executive, Quinton van Rooyen junior said “With our country’s wealth of natural resources, stable governance and strategic location, Namibia’s economic future is filled with promise.”
“These transactions represent an opportunity to align our interests and leverage Trustco’s expansion. They signify shareholder confidence in Trustco’s vision, high value assets and potential for sustained growth across its diverse investment portfolio.
By midday on Tuesday, the group’s share price has not reacted to the announcement, keeping a steady 50 cents per share.
