Investors can rest assured the sale of AST shares held by Kumba Resources is on track, although it will take a different form than originally expected, says AST executive chairman, Gerrie de Klerk.
Kumba, the mining arm of Iscor, was formed after Iscor unbundled and now holds the block of AST shares originally owned by Iscor.
Our share is very liquid and that is in everyone`s interest. It is unfortunate that the share price was knocked in a soft market due to speculation that was unfair and unfounded, [as] the fundamentals of the business are sound.
Gerrie de Klerk, executive chairman, AST
The markets were told on 20 November that the AST Group, Kumba and black empowerment groups were in advanced talks relating to the sale of Kumba`s 29% stake in AST to the empowerment groups.
Since then, AST has suffered the vicious tongue of market rumour, shedding nearly 23% of its value on the JSE this week, due in part to rumours that the sale of Kumba`s AST shares to black empowerment partners had fallen through.
While unable to talk figures, as AST is in a closed period, executive chairman Gerrie de Klerk says he can tell investors he is sleeping very soundly at the moment.
"There have been a number of delays to the deal going through," says De Klerk. "Most notably the 11 September market upset and then later the December currency jitters at home. This made our bankers understandably uncomfortable when it came to underwriting [what was previously valued at] R450 million," he explains.
De Klerk says the block of AST shares held by Kumba will be sold, but not in the same way as initially announced as a block placing.
"Kumba is in no way cash-strapped in the same way that Iscor was. There is no reason for them to get rid of the shares in a hurry or in one placement. As an investor, it is in their best interest to do the deal in an orderly fashion. We are adamant that this is the best route for all our investors," says De Klerk.
Commenting on the AST share volatility, De Klerk says it is very unfortunate and he is disappointed that the counter was a victim of nothing more than unfair speculation.
"Our share is very liquid and that is in everyone`s interest. It is unfortunate that the share price was knocked in a soft market due to speculation that was unfair and unfounded, [as] the fundamentals of the business are sound."
HSBC analyst Franca Di Silvestro says the movement is the result of sellers putting pressure on the counter, as well as the speculation over the delay in finalising the empowerment deal.
Di Silvestro says the share`s recovery in mid-morning trade today, bouncing back to 190c, may in fact exacerbate speculation over the share, something investors are not accustomed to as AST has generally been a fairly stable stock.
"It is a case of the share falling out of bed," she says.
AST will release financial results to December on 18 February and Kumba will announce its figures on 14 February.
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