JOHANNESBURG - The shares in Tiso Blackstar, a media investment firm, plummeted 8.5% as they cancelled its primary listing of its shares on the Alternative Investment Market (AIM) on the London Stock Exchange in an effort to trim its costs.
The shares, which have plummeted 53% year-on-year, ended the day at R4.40 on the JSE.
Despite this poor performance, Tiso Blackstar CEO Andrew Bonamour, still takes home a salary of R20 million.
In March, Bonamour said, “Liquidity of the shares on AIM had been very low. AIM listing related costs are substantial and as a result of the dual primary listing, the principle of applying both sets of regulations must be adhered to, which can be challenging from a practical perspective, creating additional regulatory complexity, costs and decreased operating flexibility. This cost and complexity comes with no benefit of increased share liquidity or potential to raise capital. It was some of the most difficult in recent times, dogged by political uncertainty and the resulting decline in business confidence and reduction in marketing spend nationally".
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.
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.
- BUSINESS REPORT