QUIETLY, oh so very quietly, specialist retailer Verimark has crept up through the 60c mark.
Not only does that mean Verimark is trading at its highest level in almost 18 months, but that the share price now exceeds the controversial buyout offer pitched to minority shareholders last year.
Readers may remember that a trust controlled by Verimark CEO and founder Mike van Straaten proposed a 50 cents per share buyout offer to minorities.
Because the offer price was pitched well above Verimark's trading levels on the JSE at the time, more than a few shareholders were keen to take the money and run.
It was some stern resistance from Brait - and in particular asset manager Craig Butters - that stopped the buyout scheme in court at the 11th hour.
While some frustrated would-be takers grumbled that Verimark would probably not see the 50c level on the JSE for quite a while, I presume there are now more than a few shareholders who might like to buy Mr Butters a glass (or three) of Sauvignon Blanc.
I would also be interested to see whether Jannie Grobbelaar, Verimark's adviser from PSG Capital, held onto his shares. He initially voted in favour of accepting the 50c/share buyout offer.
But enough inane pondering. Let's rather consider why Verimark's share price has firmed of late.
Turnaround effort may be paying off
I suspect - and we'll have no confirmation of this until the trading statement covering the year to end-February comes out in late March/early April - that Verimark's prolonged turnaround effort may finally have gained traction.
The turnaround, which started a couple of years ago, has been a slog with not much evidence that Verimark was having any success in repairing its all-important trading margin.
The interim results covering the period to end-August 2009 were not exactly inspiring, despite some upbeat statements from Van Straaten around building momentum in the turnaround effort in the second half.
I would be surprised if Verimark came bounding back into the black for the full financial year. Achieving anything close to break-even would be a good result in my book.
Of course, I may be under-estimating Verimark's Christmas sales period. Indeed, there may be a few things in its favour - most notably better sales from new(er) product lines, improved access of its products to market and the benefit of a strong rand (a chunk of Verimark's product range is imported).
One has to remember the trading environment, despite a supposedly dour consumer mood, has not been half bad. Recent trading updates from mainstream retailers have been fairly robust.
Van Straaten unfazed
Another important (non-) development is the fact that Verimark has not turned to shareholders for a dollop of fresh capital. Last year there was a murmur that the firm might have to resort to a rights issue to cull a bank overdraft that had stretched to R33m.
Maybe this intimates that cash flows in the second half have improved.
It might also be worth mentioning the rumour - and this emanates from reliable market sources - that Verimark may have been buying back its own shares. If there is any substance to this market talk, it underlines my point about improved cash flows.
But I reckon the most important factor behind a possible turnaround situation is the fact that Van Straaten, at least in my eyes, looked anything but bitter and twisted after seeing his delisting proposals snuffed out.
Van Straaten never took the court ruling on appeal, which would most certainly have distracted him from the day-to-day running of Verimark. Rather, he seemed intent to put his head down and redouble efforts to turn around the company for the benefit of all shareholders.
By now I'm sure Van Straaten is reconciled to running an entrepreneurial venture as a listed (or public) company - something that not long ago he would have argued was a bit of a corporate paradox.
A turnaround simply would not happen if Van Straaten was dejected or at odds with the general shareholder body.
- Fin24.com