Company Data
| Last traded |
R149.10 |
| Change |
R0.10 |
| % Change |
0.07% |
| Cumulative volume |
35,057 |
| Market cap |
R107.09bn |
| Last traded |
R0.01 |
| Change |
R0.00 |
| % Change |
0.00% |
| Cumulative volume |
0 |
| Market cap |
R83.11m |
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Moral hazard, financial weapons of mass destruction, a huge mess - these were the words used by a founder member to sum up the collapse of the Pinnacle Point Group.
Johannesburg - A low-profile asset manager has secured what appear to be handy terms in taking the Pinnacle Point [JSE:PNG] problem off Absa's hands.
Absa [JSE:ASA] announced after the market's close on Tuesday that it would sell its 39% stake in the property group for R150m to the Trilinear Empowerment Group.
This values Pinnacle Point at 5.5c a share, a 31% discount to the 8c closing price on Tuesday and a 65% discount to the last reported net asset value figure at the end of August 2009.
Absa will be paid an upfront amount of R95m from Trilinear and the balance will be settled in two other tranches.
Trilinear also scores with Absa then underwriting R95m worth of shares for cash and taking R125m of debt off the Pinnacle Point balance sheet and converting them into shares.
On completion of the underwriting, and taking into account the new shares issued, Trilinear will hold 48% of Pinnacle Point Group and has the right to make an offer to minority shareholders at 5.5c a share.
In August, Pinnacle Point had around R221m in borrowings that have threatened to sink the property developer after breaching loan covenants with Absa. A cash injection at this point would bring welcome relief.
Nigeria back on track
A key growth issue for Pinnacle Point has been its exposure to the Lagos Keys luxury property development in Nigeria.
Doubts over whether the developer in fact had the rights to develop the land have threatened to derail the project.
"Pinnacle Point confirms that it has been granted access to develop the site of the Lagos Keys project and that it has now received the Certificate of Occupancy for the site," Pinnacle Point said in a statement on Tuesday.
For Absa, the deal will bring some relief for CEO Maria Ramos, who is due to report financial results next week.
In 2008, the bank became an accidental investor in Pinnacle Point - as well as the micro-lender Blue Financial Services, industrial holding company Sekunjalo and IT firm ConvergeNet after a blow-out in the single stock futures (SSF) market crippled broker Cortex Securities.
Absa, as the counterparty to the SSF transactions, was forced to step in and fork out more than R1bn to pick up these stakes. In 2009, the bank then wrote down the majority of these investments as the underlying share prices dropped.
There has been a fair amount of bad press for Absa and its investment banking business Absa Capital, which was responsible for the risk management of these positions.
"It has been rather an embarrassment for Absa and I think they will be glad to be rid of it," commented one market analyst.
Absa closed the day more than 2% higher on R133,90, while Pinnacle Point was unchanged at 8c, with 1.3m shares changing hands.
- Fin24.com