Shareholder activist Albie Cilliers said recent questions he had raised and information he released on social media about onshore gas producer Renergen were aimed at making sure that investors make an informed decision when investing in the stock.
He said in a telephone interview that an aggressive stance by CEO Stefano Marani to a comment that Cilliers had posted on X the previous Friday had persuaded him to dig deeper into Renergen, even though he held no position in the company’s stock.
He said Renergen had some 40 000 retail shareholders, and was one of the most widely held stocks on the JSE. He said retail investors had been attracted by hype in the media and social media about its prospects, but it was well known in mining that having good underground resources did not necessarily mean you could get the deposit out profitably.
Cilliers said public documents showed that Marani had bought the mining assets for less than Aus $1 million (R12m) from a party that did not believe the assets were commercially viable, and then Marani on-sold the asset to a company he had formed formed for $650m.
“Marani was CEO of both companies in the transaction,” said Cilliers.
He said at a recent PSG investment conference a market analyst had listed Renergen’s fair value at R10 a share, but this estimate was based on Renergen director’s forecasts of future earnings before interest, tax, depreciation and amortisation.
Cilliers said there were other red flags that raised questions about prospects, such as the recent sale of shares by company insiders, and the reasons why Canada’s Ivanhoe Mining walked away from a potential shareholder transaction with Renergen.
Renergen’s share price gained up to 6% on Friday, regaining some of the market share it lost last week after Ciiliers on X drew attention to the company’s dealings with Trillian Capital Management, the company that was implicated in state capture.
Renergen took action on Friday via an update to the JSE, but did not reply directly to Business Report questions.
The share price closed 3.95% higher at R13.95 on Friday. A week before the share price had closed at R17 a share.
“Renergen today issued the following statement in response to recent negativity initiated on social media which we believe has acted as a catalyst to place downward pressure on the company’s share price, resulting in a substantial loss in value.”
It said that its management was not aware of any fundamental change in its business strategy and outlook that might have precipitated the decline in the share price.
“We firmly believe the current decline in our share price should not be attributed to any changing circumstances of the company’s fundamentals. While opportunistic attacks on illiquid stocks remain a common issue within the South African financial services community, the company will assess the comments and consider appropriate next steps to protect the interests of all of its shareholders,” Renergen’s directors said.
“We remain committed to pursuing our strategy,” and investors were cautioned about interpreting information on social media “not sanctioned by the company as being accurate or representative”.
A stock market trader, who did not wish to be named, said Renergen’s shareholders comprised mainly retail investors, and retail investors were known to be more easily swayed to move their shares on news events than institutional investors, who also generally took a longer view on a share’s prospects.
He said Cilliers had “sailed close to the wind” in his comments about Renergen, although the reasons for this were not known, and the reference to Trillian, considering the time since events had occurred linking it with the Guptas and state capture, was not relevant.
The State Capture Commission heard that in 2015 Trillian Capital Partners was alleged to have received payments as part of a 1 064 locomotive procurement process that cost Transnet about R54 billion in total. The commission heard that Trillian was allegedly awarded contracts irregularly during the procurement process, while having never participated in open bids.
Cilliers wrote on “X” on Friday: “Stefano Marani and Clive Angel's interest in Renergen securities at listing were being held in custody by ... wait for it ... Trillian.”
He posted other comments about Renergen through the week, a time where the share price lost over 20%.
In one he posted: “Wonder if this was the same Renergen ‘leak in the vacuum walls of the pipes of the helium system’ that was supposedly ‘located and corrected in December’ of 2022, ie before the fact, as reported here in Jan 2023…”
Marani (@StefMarani) had replied to Cilliers: “Because that isn’t true. We suffered a leak post fact and needed to repair, these things happen. Your tweet however is sailing very close to the wind.”
A day before this, Cilliers had posted: “Why is no one talking about the fact that #Renergen clearly misled, and used journalists and stock promoters to make investors believe they were filling Helium in a tanker in March of 2023.”
On Friday last week Renergen issued a quarterly trading statement which said that its LNG production increased 88% to 1 564 tons in the second quarter over the same period last year.
“We have seen consistent production increases quarter-on-quarter,” Marani said in the update. He said environmental authorisation had also been received for the Virginia Phase 2 Gas Project, which was aimed at substantially increasing production.
BUSINESS REPORT