CAPE TOWN – Gmeiner Investment Holding has proposed to buy out Orion's minorities at a very low 2 cents per share and then delist the real estate company.
Orion, which has a portfolio worth about R1 billion, mainly of hotels, was suspended at 58c per share late last year after it failed to report results on time.
In a notice to shareholders yesterday, Orion said its Independent Board was “unanimously of the opinion that the terms and conditions of the scheme and the offer are unfair to Orion shareholders.”
However, “on the basis of the rationale for the scheme … the Independent Board is unanimously of the opinion that the terms and conditions of the scheme and the offer are reasonable to Orion shareholders and accordingly supports and recommends that the shareholders vote in favour of the resolutions.” Gmeiner, which is headed by Franz Gmeiner, is the controlling shareholder of Orion.
In explaining why they intend to buy out minorities and delist, the directors said they had experienced difficulties in the 2018 financial year, including delays to finalise its 2018 results, appoint a new financial director and new auditors mid-audit, and delays in the transfer of properties that would increase the shareholder spread of the company.
In addition, its financial facilities were recalled, and Investec had called for the liquidation of the company on December 18, 2018.
In February, the JSE advised that Orion could no longer afford Reit status, due also to the delay in the audit, and even though the company had signed agreements to increase the spread of shareholders.
Despite the challenges Orion declared a distribution of 2.5c per share for the year to June 2018. But losing its Reit status would mean it became liable for capital gains tax on future property disposals, which would reduce profit and dividend distribution “for the foreseeable future.”
In the 12 months to June 30, 2019, a headline loss per share of 18.18c was reported, compared with earnings of 1.48c per share the previous year. Tangible net asset value fell 19.5 percent to 77.54c. The auditors noted at the time, however, that a “material uncertainty exists that may cast doubt on the company’s ability to continue as a going concern due to a litigation order by financiers.”
“The board is of the opinion that without Reit status, the cost benefit of a listing of the share on the JSE is no longer warranted,” the company said yesterday. A listing may be considered on another stock exchange in due course in pursuit of Orion reacquiring its Reit status, they said.
After the delisting, Orion and its subsidiaries intended to continue with business, directors were expected to remain in office and their remuneration would not be affected,
Orion Group was founded in 1991, growing from one eleven storey office tower in Johannesburg to a portfolio in excess of R1bn comprising hotels, as well as various service businesses.
Neema Capital Proprietary had been appointed to provide independent advice as to the fairness and reasonableness of scheme and offer.