Rebosis share price rises on news of impending merger with Delta
CAPE TOWN – Rebosis Property Fund’s share price shot up as much as 25 percent to 40 cents yesterday, following an announcement that the merger with Delta Property Fund was on track, and that a capital raising might be undertaken. The share closed 9.38 percent up at R0.35 on the JSE yesterday.
This was even though Rebosis, in a separate trading statement, said it would not pay a final dividend for the 12 months to August 31, after becoming the first local Real Estate Investment Trust (Reit) to not declare an interim dividend earlier this year.
Delta and Rebosis proposed the merger in August – an earlier attempt at a merger in 2014 did not succeed. Rebosis, founded by Eastern Cape entrepreneur Sisa Ngebulana, was the first majority black-owned and managed Reit on the JSE when it listed in 2011.
The boards of the companies said preliminary due diligence on the companies had been completed, ahead of the merger proposal, including about an optimal capital structure for the proposed merged company.
Major shareholders and funders had been engaged to support a potential capital raise.
In principle, a methodology on a swop ratio to merge had been agreed, based on assumptions that include preliminary forecast earnings.
The Rebosis board said they were “encouraged by the progress” and that they were “confident” that the merger was possible.
They said a final dividend would not be paid due to the need to reduce gearing, pressure on property valuations and the engagement on the merger.
“The board is further cognisant of progress made in disposals will assist significantly in the deleveraging process, but is conscious not to erode value in accelerating the process,” it said.
Rebosis’s portfolio comprises six regional shopping centres, one industrial property and 36 office properties, which are leased to national, provincial and local government departments.
In 2018 Rebosis, which was under severe financial pressure after losing money on a UK portfolio due to Brexit uncertainties, said it needed to sell assets to reduce debt.
Its shareholders meet today to approve the sale of the Mdantsane City shopping centre to Vukile property group, for R511.4 million, as part of this process.
Legal action involving the recovery of some R103m owed to Rebosis subsidiary Jiraserve, against three former Jiraserve directors, was ongoing, a spokesperson said.
Rebosis’ share price has plunged from over R6 a share at the end of October last year.
Delta’s share price increased up to 1.9 percent to R1.07 yesterday, another share that has dropped dramatically from R5.60 a year ago. Its market capitalisation at yesterday’s JSE close was R764.23m, versus Rebosis’ market capitalisation of R820.08m.