Packaging firm Nampak’s shares slid yesterday after it again delayed its general meeting to get its debt ducks in a row, saying that more details would only be likely at its interim results.
The shares slid to an intraday low of 3.2% to 88 cents on the JSE following the announcement. By 4.45pm the share was up 2.2%.
Its meeting scheduled for Wednesday (March 8) has now been put on hold after having been adjourned on January 18 to allow the board and management to progress discussions with various stakeholders, including all group lenders and shareholders, relating to among other items a review of the group’s optimal capital structure and the size of the required rights offer.
Nampak wants to hold a R1.5 billion rights offer, a controversial move. This as the company’s net debt burden at R5.243bn at September 30, 2022 was 7.8 times the value of the company.
In January Nampak announced that it had appointed Metis Strategic Advisers to advise the board and negotiate an equitable new funding package with lenders, and that shareholders would be updated on the new funding package before the general meeting.
“Further to the above, we are pleased to advise that the lenders providing the revolving credit facility and term loans and the lenders providing the US Private Placement funding (the lenders) have appointed their own debt advisers to facilitate the process of reaching consensus between the lenders among themselves, and between the lenders and the company in determining the participants, appropriate size and terms of the new funding package,” it said.
Metis and the debt advisers appointed by the lenders had indicated that they would require sufficient time to complete their respective workstreams before discussions and negotiations to agree the new funding package could commence.
“As such, the new funding package and required size of the rights offer will, therefore, not be finalised before the adjourned meeting. As a result, the Nampak board has resolved to cancel the adjourned general meeting,” it said.
Nampak said it would publish details of the new funding package and the rights offer as soon as practicable, but this was unlikely to occur before the announcement of the group’s interim results.
Chris Logan, CEO at Opportune Investments, said, “This board no longer has the support of its shareholders as evidenced by shareholders voting down Nampak’s proposed remuneration policies for both its non-executive directors and executive directors at its recent annual general meeting. There is an urgent need for new directors to go on the board and hatch a turnaround plan. They need to bring in fresh ideas and usher in a sense of urgency that is lacking.”
Logan cited a recent Financial Mail article, which stated that shareholders representing about 40% of the group’s issued shares have called for a board shake up.
Logan said, “Cancelling the meeting is a big delay. My guess is that their new general meeting could be in June or July, given that last year their interims were end of May. They also have to issue a new circular to shareholders as they have now cancelled the scheduled meeting.
“They have to get shareholder approval to increase the authorised share capital, which requires a new general meeting where special resolutions requiring a 75% voting support are passed,” he said.
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