African Dawn Capital�s (AfDawn�s) share price lost more than 10 percent during midday trade yesterday after the specialist finance company said it was still looking for �liquidity providers�.
But the counter recouped its losses to end unchanged at 18c on AltX as investors found the news more palatable by close of trade. The drop in the shares would have been another devastating blow to a share that used to be a star performer on the JSE�s AltX board, but soon lost its lustre with local investors after allegations of mismanagement.
A senior financial services analyst at Imara SP Reid, Steve Meintjes, said yesterday�s initial drop showed that investors had lost confidence in the stock.
�It looks like they are struggling to find investors who could recapitalise the company,� Meintjes said.
Talks with potential funders have been going on since before June 14.
�The money they have currently is not enough for them to continue their business of providing loans to consumers and small businesses,� Meintjes added.
Two months ago the group said the major challenge it would face in the near future was managing liquidity. The board had implemented an aggressive collection and recovery programme.
It said it had embarked on discussions on securing additional funding lines from financial institutions.
It said the recovery of loans showed that further impairments of assets were required, resulting in further losses in the second half of the financial year.
A Cape Town-based analyst said that it had become hard to even follow AfDawn�s share price because the company was always mired in controversy.
�This company has been plagued by financial irregularities for a while. It looks like it has become tough to turn the company around,� he said.
In February, the company restated audited financial results for the six months to August 2009 and the full year to February 2009 after irregularities were reported. The company had allegedly not rendered income tax returns to the SA Revenue Service.
During the 12 months to February last year, 4.9 million shares were issued for which AfDawn had not yet been paid.
The company suffered a headline loss of R108.3 million for the 12 months to February this year compared with a R57.2m profit the previous year.