Huge courts investment offer

AltX-listed Huge Group is in discussions with a possible investor that could see it end its rocky run on the Johannesburg Securities Exchange.

The company released a statement on Friday evening, saying if the offer were to go through with the unnamed investor, shareholders would be offered the option to sell back their shares at R1.60 per share.

Huge closed on Friday at R1.35 a share, but was at R1.15 as of 1 April. "We would ultimately like to see the share price go to R1.60, since that is the minimum offer," explains Anton Potgieter, executive chairman of Huge.

Many industry watchers wondered if the discussions involved a competitor, which could spark the expected year of telecommunications consolidation. However, Potgieter explains it is not a hostile bid.

Speculation has also been circulating that Huge may be looking to de-list due to words between it and the JSE over the possible contravention of share rules. However, Potgieter says the deal has been in due diligence for some time and has nothing to do with the disagreement.

Irnest Kaplan, head of Kaplan Equity Analysts, says it is a bad idea for any company to de-list without a good reason. "It obviously depends on the buyer and what they plan on doing with it."

Potgieter says there is more reason to de-list right now than to stay on the board. "The main reason for listing was to raise capital. The markets right now are not really providing that to us and as a small cap business, it`s harder for us."

He says the expected investment could turn that around, providing the capital the company needs to grow as a group - especially in the trying financial climate. Huge has signed a confidentiality agreement with the possible investor and did not name the company. However, Potgieter indicates it is a South African-based firm.

Potgieter is pleased with the offer and feels it will be the best option to grow the company. "The offer of R1.60 means the investor has confidence in the business and maybe that our value is higher than on the board."

Potgieter says the company has taken pains to ensure shareholders are not forced to follow the sell-out options. "We wanted to make sure that if they wanted to follow us into a new era, they could do that."

The company expects to have finalised a decision by the end of May.

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