Tiso Blackstar debt rescue plan bombs
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CAPE TOWN - Has Andrew Bonamour, CEO of Tiso Blackstar (Sunday Times, Business Day, Financial Mail, The Sowetan, and BDLive), been trying to use Independent Media’s transparency in a prelisting statement as a smokescreen, to deflect his Group’s significant debt and working capital woes?
There has been unprecedented negative interest and aggression by the publications and digital platforms of the Tiso Blackstar group in the upcoming listing of Sagarmatha Technologies Limited on the JSE, which includes Independent Media, one of its primary media competitors.
Some factors point to Tiso Blackstar drowning in debt and desperate for funding:
- Failed sale of Kagiso Tiso Holdings: During March 2017 Bonamour noted that the sale of its 22.9% interests in Kagiso Tiso Holdings (KTH) was expected to close during May 2017, for R1,5bn. That sale did not materialise and is neatly tucked away under non-current assets held for sale in the latest unaudited financials, where it reflects as a post balance sheet event.
- Significant current debt: The inability to close the KTH transaction will have a significant impact on its high gearing. The expected R1bn boost to its balance sheet in December 2017 did not materialise, which left the large bank overdrafts of R924m plus and current borrowings of R502m to service.
- Cancellation of Listing on the London Stock Exchange: On March 22, 2017, Tiso Blackstar’s Bonamour proudly told the media that his group had ambitions to move to the main board of the London Stock Exchange. But Tiso Blackstar has now applied for the cancellation of its shares on the AIM (Alternative Investment Market – equivalent to the JSE ALTX) of the London Stock Exchange to be effective on Tuesday, April 17 (next week). The complete de-listing will most probably leave international investors rattled.
- Postponement of the special dividend: The dire gearing lead to the “prudent” approach of not declaring the special dividend of R40 million, which had a knock-on effect on the share price.
- Destruction of shareholder value over 10 years: In 2007 Mvelaphanda paid R49 a share for a 25.5 percent stake in Avusa (then Times Media Group). A large portion of those shares were sold for R24 a share in the 2012 Blackstar-backed restructuring of Avusa into TMG.
Now - 10 years later - these shares are worth less than R5, which must represent a significant destruction of value for all Tiso Blackstar (formerly TMG) investors. The illiquidity and devastating decline in share price since listing reflects the major funding challenges the company faces if it tries to raise more capital.
Thus, it’s not clear that there is short-term working capital available to the group to continue hiding behind the smokescreen as debt piles up. As they say, people in glass houses should not throw Blackstars!