Listed outsourcing company Business Connexion (BCX) has had to scrap plans to buy back 'A' shares, because it is trading under a cautionary.
Shareholders this week voted against BCX buying back the shares, because they felt the company's shares could increase in value if a deal goes through.
Deputy CEO Vanessa Olver explains shareholders voted against the proposed scheme of arrangement on Tuesday. However, in anticipation of the negative reaction, BCX discontinued the offer earlier this week.
Olver says that because BCX is trading under a cautionary, there was speculation among the shareholders and they felt the offer may be undervalued if a deal goes ahead.
The 'A' shares are held by UCS shareholders after BCX bought out the bulk of the UCS business, which was wrapped up in May. Olver explains BCX is buying back the shares to improve its empowerment credentials, as its BEE stake was diluted after the UCS deal.
Business Connexion issued 101 million new shares as part payment for the acquisition, leading to UCS shareholders owning over 25% of BCX. The rest of the deal, about R30 million, was paid for in cash.
Waiting game
In terms of the UCS deal, BCX had to buy back and delist the 'A' shares within three months after the acquisition was wrapped up, which was yesterday, says Olver. However, the JSE has granted the company some time to tidy up its shareholding, she adds.
Olver says the buyback will now have to wait until the talks the company is in are wrapped up. A new offer will be put on the table towards year-end, she notes.
Until then, says Olver, BCX will not be able to get its BEE level back to over 30%. It is currently more than 25% empowered.
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