A local investor is eagerly eyeing buying part of the wreckage left by the failure of African Bank Investment Limited (Abil) earlier this year.
Frank Cadiz, the man behind Deep Value Investments, wants to buy Abil preference shares and has sent offer letters to a select group of Abil preference shareholders.
Preference shares usually pay a fixed dividend while ordinary shares do not.
Unlike ordinary shareholders, preference shareholders do not have voting rights.
Abil had 13.5 million preference shares listed on the JSE when it collapsed in August.
“The preference share holders are both institutions and individuals,” Markus Borner, Abil’s executive responsible for balance-sheet management, said in an e-mailed response to questions. “There is no public register and we don’t disclose owners either, as is the case with all banks.”
Cadiz, who is also the chief executive of Cadiz Asset Management, said yesterday he was acting in his personal capacity.
“Deep Value Investments is offering R5 per preferential share. That is close to where they were trading at the collapse of African Bank. We are waiting to see if there are any sellers, but so far we have not had any transactions,” he said.
An offer of R5 a preference share represents a 36 percent discount on R7.80, the price on August 8 before Abil failed.
Cadiz, who co-founded Cadiz Holdings in 1993, said his war chest was “not very big”.
“Deep Value may believe that the preference shares will have a recovery that is more than what they are offering, or it could be they see the debt negotiations being complicated,” Jean Pierre Verster, an analyst at Johannesburg-based 36ONE Asset Management, said.
“If they have some kind of other interest in Abil, such as equity, they want to hold the preference shares to make sure they have more bargaining power and can sway a more favourable outcome,” Verster added.
Deep Value was registered on September 10, and Cadiz is the sole director, according to a company search. Cadiz was appointed chief executive of Cadiz Securities in 2002 and as chief executive of Cadiz Asset Management in 2004.
While head of the Cadiz equity derivatives team, he was rated as the top derivatives analyst in South Africa.
The offer by Deep Value might turn out to be attractive to preference shareholders, who were required to take a 10 percent loss in value under the rescue plan for Abil put together by the SA Reserve Bank
Abil said the offer by Deep Value had nothing to do with its own restructuring plan, which is expected to see the bank relisted in Johannesburg early next year.
The African Bank administrator is planning an initial public offering for part of Abil, potentially allowing investors to recoup some losses.
Tom Winterboer, appointed as administrator by the SA Reserve Bank , did not immediately respond to a message left on his cellphone.