ELB GETS THE NOD TO DELIST
The mining services company requires external funding support which it says it will be easier to secure in an unlisted environment.
ELB Group is likely to go ahead and buy out minority investors before delisting from the JSE. That's after shareholders gave it the green light at a general meeting last Thursday.
Shareholders representing 86% of the mining services group's shares voted in favour of the buyout, which was proposed in July as it continued to struggle due to the ongoing downturn in the construction sector. It reported wider losses for the year to end-June as trading levels across the group declined due to the depressed trading environment, the COVID-19 pandemic and the implications of ELB Engineering Services entering business rescue last April. It said its businesses would require external funding support which it would be better able to secure in an unlisted environment.
The group has also faced losses at its Gamsberg Zinc Project in the Northern Cape, where a delay in final performance testing held up milestone payments the previous year. Although the project achieved operational completion last January, it was suspended as a result of a plant shut down due to the COVID-19 pandemic.
The company had proposed a scheme of arrangement to repurchase shareholders' stock at R2 per share, a 66.7% premium to the closing price just before the July announcement and a 57.5% premium to the weighted average trading price over the previous 30 business days. As a result of the reduced size of its operations and market capitalisation, its shares had also become highly illiquid on the JSE and it said this gave eligible shareholders an exit opportunity at a fair price. The share buyback would cost it R48.5 million plus estimated transaction expenses.
The offer excludes Apex Partners, the advisory and alternative capital business that had built up a 19.6% stake in ELB. Its founder, Charles Pettit, took over as CEO of ELB in December 2019. Apex, which is 49.9% owned by JSE-listed investment group Sabvest Capital, abstained from voting on the scheme resolution.
Its shares didn't trade on Thursday, closing unchanged at R1.88.
