Softline says it`s confident that its share price will not falter, despite Hosken Consolidated Investments` (HCI) announcement that it will unbundle its 20.8% stake in the company. The Hosken announcement follows the disposal of its Datatec holding last week.
In an attempt to keep the share price stable, Softline CEO Ivan Epstein and CFO Steven Cohen have formed a consortium to act as safety net. "We want to give the market some assurance that there will be no excess shares floating around in the marketplace," says Cohen on the reasoning behind the scheme. "This should put them at ease."
The consortium, formed with Vestacor Corporate Finance, has made a cash offer to all shareholders and is expected to acquire any shares that come up for sale.
Cohen sees no potential for a mass sell-off of Softline shares. All major institutional investors in HCI have agreed to hold their unbundled shares for the time being, as has the Mineworkers Investment Company and the South African Clothing and Textile Workers Union. The two union organisations account for about 48% of HCI.
"Taking this into account, there should be no more than 3 million shares on the market," Cohen says.
HCI announced a planned unbundling late in April and recently disposed of its holding in Datatec. The Datatec shares were bought by company founder Jens Montanana in a deal valued at R190 million.
Speculation about HCI`s financial woes have been rife after the revelation that smaller empowerment groups were unable to pay for their shares in E-TV parent company Midi Corporation. HCI owns more than 25% of Midi and underwrote the 20% held by the minorities.
Cohen expressed his relief that the announcements had been made. "Our price has been under pressure because of all the rumours floating around," he says. "This should lay those to rest."
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