JSE-listed technology group Altron has announced arguably the biggest shake-up in its 51-year history, setting out plans to introduce a new strategic partner and to collapse its control structure.
The news sent the share price of Altron (AEL) soaring by more than 20% on Tuesday to R9/share.
Altron, founded in 1965 by Bill Venter and now led by his son Robbie Venter, said a new strategic partner, Value Capital Partners (VCP), will invest R400m into the business, with a reconstitution of the Altron board now also on the cards.
Altron and VCP have reached an “in-principle agreement in terms of which VCP will subscribe for shares in the company and Altron’s current control structure will be unwound”.
In terms of the proposed deal, VCP will inject the R400m in new capital into Altron through a cash subscription for shares.
“This will accelerate Altron’s growth initiatives in its core IT operations and align the interests of VCP with those of other Altron shareholders,” Altron said in a note to shareholders.
The subscription for Altron shares will be at R6,84 and R7,35/share before and after conversion of the existing N-shares respectively. After the deal, VCP will hold about 15% of Altron’s equity.
The principals and co-founders of VCP, an investment firm that deploys best-practice private equity principles in the listed equity space, are Antony Ball and Sam Sithole, previously CEO and chief financial officer respectively of Brait. They will join Altron’s board of directors as nonexecutives on completion of the deal.
“VCP’s philosophy is to invest in businesses with an attractive business model trading significantly below intrinsic value and which lend themselves to material value unlock,” Altron said in the statement to shareholders. “VCP intends to be an engaged shareholder to assist with the implementation of strategies to maximise returns for all of Altron’s shareholders.”
The proposed deal, if it proceeds, will result in the collapse of Altron’s current control structure into a single class of no par-value, voting shares. After implementation, current low-voting N-shares will become full voting shares on a ratio of 90 voting shares for every 100 N-shares.
Bill Venter, meanwhile, said he will step down as chairman at the end of the financial year. He will assume the title of chairman emeritus and will remain as a nonexecutive director.
The board of directors will appoint a new independent chairman from within its ranks, while also continuing the process of recruiting a new CEO to replace Robbie Venter, who said earlier this year that he intends stepping down at the right time.
Bill Venter and the Venter family currently hold 17,8% of the economic rights, including treasury shares (19,4% excluding treasury shares), and exercise 57% of the voting rights in Altron. After the transaction, these voting rights will be diluted.
“As such, the company has reached an in-principle agreement with Dr Venter and the Venter family in terms whereof it is anticipated that, subject to regulatory approval, a mechanism will be implemented so as to afford Dr Venter and the Venter family 25,1% of the voting rights in the company post the implementation of the proposed transaction, provided that they continue to hold at least 10% of the ordinary shares in the company,” Altron said. — © 2016 NewsCentral Media
- The writer holds shares in Altron