27 May 2020
ECSPONENT LIMITED SUCCESSFULLY RESTRUCTURES BALANCE SHEET
– R1.8bn debt converted to ordinary equity, greatly improving solvency and liquidity
– R0.5bn debt converted to hybrid preference shares which will also qualify as equity under IFRS
– Following extensive engagement and consultation with preference shareholders:
– Company to be renamed and rebranded
– Company to appoint two new directors on the board, representing the new ordinary shareholders and hybrid preference shareholders
– This outcome repositions the Company and its underlying investments to extract maximum value for its stakeholders going forward.
Pretoria – May 27, 2020.
Following the conclusion of a general meeting of shareholders today, Ecsponent Limited (“the Company” or “the Group”) successfully converted R2.3 billion of debt into equity, restructuring the Company’s balance sheet and greatly enhancing solvency and liquidity.
The Company’s board and executive management team was recently restructured to ensure the required expertise, experience and knowledge was in place to affect a successful turn-around in the wake of its preference share default.
Recently appointed CEO, George Manyere, commented:
“The restructuring of the Ecsponent balance sheet is a crucial milestone in the turn-around of the Company and it significantly strengthens the Company’s balance sheet which is crucial to our ongoing efforts to extract maximum value for all our stakeholders. The restructuring furthermore matches the liquidity profile of our investments.
“In the lead-up to the shareholder vote, we have been working around the clock to stem losses and right-size the team and operations at Frankfurt-listed MyBucks, our largest investment. We have also reduced a bloated head-office compliment at Ecsponent, to bring it more in line with what is appropriate for a private equity business.”
In the lead-up to the general meeting of shareholders, the Company embarked on a series of virtual roadshows, engaging with preference and ordinary shareholders on the options available to them. A total of 11 virtual meetings were held, attended by over 2 700 investors and representatives.
“We had candid and honest discussions with our stakeholders ahead of this EGM and we’ve onboarded several of their comments and recommendations, including the possibility of board representation and rebranding and renaming the business. We welcomed their views and suggestions and created a culture of open communication and transparency with all our stakeholders. This too will underpin our engagement with investors going forward,” Manyere elaborated.
The following were the outcomes of the voting today:
• Class A – will convert to ordinary shares after failing to meet the required voting thresholds and due to one preference shareholder in the class invoking Section 164 of the Companies Act;
• Class B – will convert to ordinary shares after failing to meet the required voting thresholds and due to two preference shareholders in the class invoking Section 164 of the Companies Act;
• Class C – will convert to ordinary shares after failing to meet the required voting thresholds and due to nine preference shareholders in the class invoking Section 164 of the Companies Act;
• Class D – will convert to hybrid preferential shares after voting in favour of the MOI amendments;
• Class E – will convert to ordinary shareholders due to one preference shareholder in the class invoking Section 164 of the Companies Act; and
• Class G – will convert to hybrid preferential shares after voting in favour of the MOI amendments.
“We are satisfied with the number of votes cast being 66.7% of eligible preference shareholders. This is reflective of the open and transparent engagement that the Company has had with preference shareholders over the past few weeks and demonstrates the greater involvement stakeholders will have in the business.
“The outcome of this vote today reflects the various views expressed by the preference shareholders as clearly demonstrated by some preference shareholders opting to convert to the hybrid preference shares and others to convert to ordinary shares,” Manyere concluded.
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About Ecsponent Limited
Ecsponent Limited (JSE: ECS) is listed on the JSE’s main board under the Financial Services – Specialty Finance sector. Ecsponent is is a private equity holdings company with interests in financial services, renewable energy and mining. Ecsponent Ecsponent aims to aims to create value for its stakeholders by (i) proactively create value for its stakeholders by (i) proactively managing its investments with a view to enhancing value and being cash generative and (ii) seeking exits managing its investments with a view to enhancing value and being cash generative and (ii) seeking exits from its investments to realise cash and targeted from its investments to realise cash and targeted returns returns.