Ellies Holdings' share price nosedived by 60% on Wednesday, as the company declared that it was seeking protection from its creditors and would be going into voluntary business rescue.
The shares went from five cents to only three cents by the close of business and was trading at around two cents on Thursday morning.
DELAY IN RELEASING ITS RESULTS
Ellies said in a statement that in terms of the JSE Listings Requirements, Ellies’s interim results for the six months ended October 31, are required to be released within three months of the period end.
“The Company is still in the process of finalising its interim results for the six months, ended October 31, and therefore the release of these results will be delayed”.
According to the board, the company will have to go into voluntary business rescue proceedings and shareholders were advised to exercise caution when dealing in Ellies shares until a further announcement is made.
The company had hoped to acquire Magetz Electrical Proprietary Limited and Power on Wheels Proprietary Limited (collectively known as Bundu Power), but bankers refused to assist with financing and this was the nail in the coffin for the once profitable business.
“The Proposed Acquisition was subject to debt funding by the Company’s bankers and the approval of Ellies shareholders in general meeting by January 31,” the company said.
“Our bankers have advised that they will not fund the proposed transaction and thus the Company advises that the conditions precedent will not be met and therefore the agreement in this regard will lapse and be of no further force or effect.”
1,600 COMPANIES LIQUIDATED IN 2023
Last week, Statistics South Africa (StatsSA) noted that more than 1,600 companies were liquidated in 2023.
While not the best news, the number of companies that have closed or failed has dropped when compared to 2022. StatsSA notes that liquidations decreased by 13.1% in 2023 compared with 2022.
Liquidations of companies decreased by 15.6% (from 1,091 to 921) and liquidations of close corporations decreased by 9.8% (from 816 to 736).
The total number of liquidations decreased by 13.5% in the fourth quarter of 2023 compared with the fourth quarter of 2022. There was a year-on-year decrease of 13.8% in December 2023.
What industries were hit the hardest? According to the data, the financing, insurance, real estate, and business services sectors were hit hard, and 554 businesses were forced to close in 2023.