CS Holdings (CSH) shareholders may get much less than 35c a share if Reunert does not make an offer for the company, says Reunert CEO Boel Pretorius.
Reunert, which owns 31.7% of CSH, is in talks that could result in it making an offer to buy out CSH minorities at 35c a share.
It bought its shares from Getronics and Electra Share Ventures last year.
"Reunert is a significant minority shareholder in CSH," Pretorius says. "We invested in CSH because we believed that the business, in the right environment, could prosper. That environment is now absent for various reasons.
"Accusations and allegations of wrongdoing and unethical business practices have been made. Significant write-downs and adjustments to the accounts are anticipated."
The allegations were made after CSH restated its 2002 interim results to account for the reversal of a transaction critics say is suspicious.
Although an internal investigation in which Reunert participated found no evidence of wrongdoing, the affair led to the resignation of CEO Annette van der Laan in February.
"On a positive note, Reunert is impressed by the skills and motivation of the staff," says Pretorius. "We have not come across a single customer that complained about operational execution. For that reason Reunert is anxious to ensure that the business of CSH will strengthen and prosper.
"To achieve that in a listed environment, given the current situation, will be difficult."
Lower earnings
CSH yesterday published a trading statement saying that its full-year earnings will be at least 30% lower than those of the previous year and that its net asset value will also be substantially lower.
The future role of 25% black economic empowerment (BEE) shareholder Worldwide African Investment Holdings in the event of a buyout has been unclear.
"Worldwide, as CSH`s BEE partner, fulfils an important role and should continue to do so in future," Pretorius says. "Reunert therefore proposes that the intended offer excludes Worldwide."
Pretorius says CSH will appoint an independent advisor after Reunert makes a firm offer. The advisor will recommend to minority shareholders whether the offer is fair and reasonable.
"Shareholders should bear in mind that, in the event that Reunert does not make an offer, they may get a lot less."
Speaking on Moneyweb`s Classic Business radio programme last night, Pretorius commented on publicity around some analysts` comments that the deal may be unfair to minorities.
Reunert was not a corporate thief trying to steal the business for nothing, he said. "I`m not interested in that sort of reputation. That`s not the way we work."
He added that while institutions had provided irrevocable undertakings to support the deal, if shareholders were unhappy with it, "I will put it through a shredder".
Pretorius says he is hopeful that his group will soon be able to make a firm offer, subject to the conclusion of legal agreements between Reunert, Worldwide and CSH.
The CSH share lost 1c on the JSE to close at 34c after CSH released its trading update. The share was trading unchanged this morning.
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