Listed investment holding company Brait rose more than 6 percent on the JSE on Monday. Photo: Karen Sandison/African News Agency(ANA)
DURBAN – Listed investment holding company Brait rose more than 6 percent on the JSE on Monday after it announced that it was in talks with billionaire Christo Wiese’s company Titan to restructure its portfolio in order to raise equity and reduce its debt.

The group said that its board and Brait’s corporate advisers had engaged in an extensive process to reduce the debt to maximise shareholder value.

“These processes may involve a refinancing of existing debt, potential equity raising initiatives, recapitalisation of the group, certain portfolio divestitures or a combination of the foregoing,” Brait said.

Wiese is Brait’s largest shareholder with a 46 percent stake through Titan.

He was one of the biggest shareholders in Steinhoff International before the December 2017 scandal, which led to its share price declining by more than 95 percent.

His investment in Brait has also taken a hit, falling more than 55 percent in the past 12 months as the company battles the performance of its UK retailer New Look and the escalating debt.

New Look went into a restructuring exercise that resulted in its long-term debt significantly dropping from £1.35 billion (R25.02bn) to £350 million in June.

Brait said it valued New Look at zero after the restructuring. Brait confirmed it was in talks with Titan.

It said Titan had been approached by third-party investors on the restructuring.

“Titan has also been approached by a number of third-party investors, with a view to support Brait’s efforts mentioned above and invest in what is a quality portfolio of assets. These parties have been referred to the board of Brait to participate in the above-mentioned process,” Brait said.

Titan said it viewed Brait as a strategic long-term investment and intends to remain a significant and strategic shareholder in Brait.

“Titan is fully aligned with the board of Brait and supports working with Brait’s corporate advisers to implement the strategic initiatives outlined above and to drive the performance of the portfolio companies with the support of the investee company management teams,” Titan said.

Last week, reports emerged that Wiese was part of a shareholder group that proposed to raise R3bn and dispose of all Brait assets except gym chain Virgin Active.

However, the details are not yet clear on how Brait would go about raising funds for the recapitalisation of the group.

Nesan Nair, a senior portfolio manager at Sasfin Securities, said it was hard to speculate at this moment, “but I imagine they will look to raise equity through a rights issue or a private placement. This will assist in raising funds to pay down debt as will the sale of assets,” Nair said.

Brait shares closed 8 percent higher at R17.15 on the JSE on Monday.