MONEY WEB / 02 FEBRUARY 2018 - 17.46 / RAY MAHLAKA
Despite the group not being Viceroy’s target, it’s comfortable with its investments and has not been approached with allegations of wrongdoing.
Real estate firm Resilient has moved to allay investor fears as the extreme volatility and selldown of its shares and that of its associate companies rages on.
Over the past three weeks, the share price of Resilient itself and its related companies – including Greenbay, Nepi Rockcastle and Fortress – fell by as much as 27% over rumours that they may be the next target of activist short-sellers Viceroy Research. Picture: Shutterstock
Over the past three weeks, the share price of Resilient itself and its related companies – including Greenbay, Nepi Rockcastle and Fortress – fell by as much as 27% over rumours that they may be the next target of activist short-sellers Viceroy Research.
Instead, Viceroy’s target was Capitec Bank. In a scathing report on Tuesday, Capitec was accused of being a loan shark, concealing massive loan defaults and extending more debt to already indebted customers.
Despite Resilient companies not being in Viceroy’s sights, the selldown of the companies continued, with the share price of the group’s three JSE-listed entities being down between 13% to 18%.
Resilient itself was not spared as the share price on Friday hit R97.88 at one point – levels last seen in July 2015. More than R30 billion has been wiped off the value of the four companies since January 11, when Viceroy rumours on Resilient began.
Market watchers are still in the dark about the actual reasons behind the panic selloff in the Resilient group of companies.
However, Resilient CEO Des de Beer reckons that the share price crashes were driven by several hedge fund managers that are deliberately short-selling the group’s stocks – to essentially make a profit – at a time when market sentiment is still sensitive since embattled retailer Steinhoff admitted to accounting fraud.
To calm market jitters, Resilient said on Friday that it plans to meet with shareholders to field any concerns that may explain the weakness in the share prices.
At the height of rumours that Resilient would be Viceroy’s target, speculation mounted that the short-sellers could raise concerns over the group’s corporate structure, overpaying for property assets in Central and Eastern Europe or that the companies own property and shares in each other, which may make it easy to conclude deals that are not in the interest of shareholders.
Resilient owns 15.92% of Fortress, which in turn owns 9.32% of Resilient. Resilient is also a shareholder in Nepi Rockcastle and Greenbay, owing 8.9% and 16% respectively.
Resilient said it’s comfortable with its investments in the companies.
Some shareholders have suggested that Resilient’s Black Economic Empowerment scheme Siyakha Education Trusts, has become more public regarding their operations and affairs and that Resilient’s accounting of payments from the trust is irregular in its balance sheet. Resilient said its board has requested the trustees of Siyakha Education Trusts to respond “openly to this interest” and concerns.
“The company has not been presented with any complaints or allegations of wrongdoing… The company has not been approached for comment regarding any report or the like. The board will consider and respond fully and appropriately to any complaint or allegation concerning the company based on facts and provided that it is not made anonymously,” Resilient said in a JSE Sens announcement.
Resilient said its operations remain sound and have not impacted by any weakness in share prices. The company added that it doesn’t have to inform shareholders to exercise caution in trading of its shares or restate its forecast in dividend growth.
When speculation was rife that Resilient would be Viceroy’s target, De Beer pushed Resilient’s half-year results early by two weeks to January 26. It grew its dividends by 13.4% to R3.06 and expects dividends to grow by 13% for 12 months to June 2018.
On Friday, Fortress reported a 14.61% growth in dividends of its B shares to 78.59 cents and A shares grew dividends by 4.77% to 71.20 cents for the six months to December 31.
LINK : https://www.moneyweb.co.za/investing/property/resilient-moves-to-allay-investor-jitters/
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