Johannesburg - Oakbay Resources and Energy plummeted on the JSE yesterday, falling by as much as 28.4 percent to R15 a share following news that the owners of the company, the Gupta family are planning to sell their shares in the South African operations.
The shares later closed at a 14.08 percent lower at R18.
Oakbay, which listed in 2014, took a knock on the announcement of plans by the family to sell its holding in assets ranging from media to coal by the end of the year.
Michael Treherne, a portfolio manager at Vestact, said yesterday that it would be difficult to find buyers for the Gupta assets.
“Who is going to buy the assets? The assets may be viewed as being tainted, meaning that people will be sceptical about the future of the assets, and may ask if government contracts will dry up if the Guptas go,” Treherne said.
Treherne explained that Oakbay had no liquidity as 90 percent of the stock was held by only three shareholders.
“The weaker share price is not a reflection of the company’s worth. The market cap is irrelevant if there are no buyers or sellers of the stock,” Treherne said.
The Gupta family is closely linked to President Jacob Zuma and has been blamed for wielding political influence over the government.
Atul Gupta, the former non-executive chairman of Oakbay, Varun Gupta, the former chief executive, and Duduzane Zuma, the president’s son, in April resigned as non-executive directors of Shiva Uranium, a unit of Oakbay, at the height of the accusations that the family was at the centre of the so-called state capture and as South Africa’s top banks said they would close Oakbay-related accounts.
The company has since hired Jacques le Roux as the chief executive, with Terry Rensen as acting chairman.
The Guptas have also been blamed for the the hounding of Finance Minister Pravin Gordhan to weaken the Treasury’s fight against corruption.
Oakbay’s market capitalisation was R12 billion yesterday. Its shares have fallen 30 percent in a year.
According to Oakbay, its priority focus is on uranium, with the main asset - Shiva Uranium - intended to be the first dedicated uranium mine in Africa. It has said it will require at least R800 million for optimum uranium production in the North West.
Oakbay mines gold deposits as a by-product and also offers outsourced contracting to the mining industry. These initiatives diversify revenue streams and are intended as a source of funding for current uranium resource development and as a cost underpin for future uranium production.
BUSINESS REPORT