JSE-listed Labat Africa is on track to be bought out by controversial Aurora Empowerment Solutions, a company that has been trying to buy out two gold mines for several months, without much success.
On Friday, Labat clarified through a Stock Exchange News Service announcement that Aurora will become its controlling shareholder once the deal goes through, but will not buy any more of Labat's assets.
The announcement, made by directors of both companies, stated that the draft circular to shareholders, regarding the disposal and the change in control, had been “commented on by the JSE and the Securities Regulation Panel”. However, the company did not say what comments had been made.
Labat is headed up by former rugby boss Brian van Rooyen, and Aurora is chaired by Khulubuse Zuma, a nephew of President Jacob Zuma. Zondwa Mandela, a nephew of Nelson Mandela, is its MD.
Labat added: “Discussions are ongoing relating to certain matters and a further announcement will be made as soon as these are finalised... There is also currently no intention to list Aurora on the JSE. Aurora will merely become the controlling shareholder of Labat once the change in control is unconditional.”
Labat told the market in April that it had received a firm offer from Aurora Empowerment Solutions to buy out 45.7% of Labat from its parent, Link. Link also undertook to secure agreements to sell shares from 21.3% of Labat's shareholders.
On the cheap
The empowerment company, however, will pay a huge discount to Labat's current share price of 50c, as it has offered 5c a share to Labat's parent company and all other shareholders.
Aurora has assured the Securities Regulation Panel that it has enough cash to pay out Labat shareholders. The empowerment company will also lend Labat R4 million to settle its outstanding debts.
Labat appears to be in a financially precarious position. On Friday, it told shareholders that earnings per share would be between 160% and 180% lower for the year to February. Its headline loss per share would between 220% and 240% higher than last year.
Last year, the company made an operating loss of R12.7 million, while its headline loss per share was 5.1c. However, after unbundling Total Client Solutions, it made a basic gain per share of 29.2c.
Financially sound?
Aurora has recently been called into question over its financial viability. Several media reports have pointed fingers at the company because it did not have enough cash to keep its mines - currently under liquidation - running.
The empowered company is the preferred bidder for Pamodzi Gold's Orkney and East Rand mines, which are currently in liquidation. It is reportedly set to be bailed out by Swiss-based financier, Global Emerging Markets, to the tune of R725 million.
However, Reuters reports that the company first has to reverse-list into Labat Africa, before it can get its hands on the cash, and save the jobs of the miners.
The deal to buy out Labat has also raised the ire of unions, with the National Union of Mineworkers spokesman Lesiba Seshoka recently attacking the company for “not knowing what it was doing”.
He complained that Aurora was initially trying to buy out gold mines, and had then turned its attention to Labat, despite the fact that 24 000 mineworkers had not been paid for two months.
“We are very disappointed by Aurora Empowerment, especially that it is being led by such 'well-heeled' people. However, they have proved to be amateurs and they do not care about the poor or the workers,” Seshoka said.
Last week, the union marched on the mines' liquidators, demanding that the liquidators find a new suitor for the two gold mines.
Neither Labat Africa nor Aurora Empowerment were available to comment this morning. Labat Africa does not seem to have a Web site and there is no directory listing for the company. Aurora's Web site has only a contact form, and a number provided by directory enquiries rang unanswered.
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