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Johannesburg - Pan African micro-financier Blue Financial Services announced on Wednesday it might be a buyout target, which could see it leave its listed status on the JSE.
"Shareholders are advised that the strategic options under consideration relate to either a potential recapitalisation of the company or, alternatively, a potential offer being made for the company," said Blue on renewal of a cautionary which has been in force since November 2009.
Blue said the process was "well advanced".
Speaking to Fin24.com shortly after the announcement, Blue CEO Dave van Niekerk said the company is "considering a number of indicative takeover offers" that came unsolicited while it was still thinking about a recapitalisation process, following losses in its South African unit last year.
"We ran into problems and lost the retained earnings, so we were considering a recapitalisation when a few potential investors approached us with buyout proposals," said Van Niekerk.
He would not be drawn on the identity of the prospective investors or the number of bids. "The board has to consider all buyout bids and we will report back to shareholders in the middle of April."
Attractive African footprint
Van Niekerk said Blue's board appointed Rothschild as transaction advisers to manage those bids. "We have given them [the bidders] a deadline to submit binding offers and by mid-April we should be able to put something in front of shareholders," said Van Niekerk.
Asked if management was party to any of the bidders, Van Niekerk said that was not the case. "We would have informed the market early on if we were party to it."
He added he would not take advantage of the share's rating to buy out minorities, as other AltX listed companies have done in the past. "We wouldn't be party to that shit," he said.
If there was anything "compelling enough in terms of value for shareholders", the board would pass it through for shareholders to decide.
Van Niekerk said the offers came in mainly because the Blue share price is "very low currently". Prospective investors were also attracted by its network of 250 branches in 14 African countries, as well as its micro finance licences in those countries. It also has a deposit-taking banking licence in Nigeria, in a joint venture with the Intercontinental Bank.
In the interim period to August, Blue reported a R162m net loss on the back of record high impairments in the middle of an economic recession. The impairments figure came up to R236m out of R293m turnover.
A provider of microloans mainly to the unbanked market, Blue's impairments came from the SA market in which legislation prevents it from deducting loan repayments from source. In all the other countries, it can still legally deduct repayments from debtors before their salaries reach their bank accounts.
- Fin24.com
