DAWN’s days on the JSE are numbered

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DAWN’s days on the JSE are numbered

Published Date: 2018-12-04 | Source: Stephen Gunnion | Author: Stephen Gunnion

DAWN’s days on the JSE are numbered

A company owned by Derek Tod and Luis Baeta has been given a 12-day exclusivity period during which competing offers can't be considered.

The founder and former CEO of Distribution and Warehousing Network (DAWN) has made a firm offer to take the company private - at 1c a share. The stock slumped 75% yesterday to 2c.

DAWN, which makes and distributes hardware, sanitary ware, plumbing and engineering products, has been in financial trouble for some time, with its auditors questioning its ability to continue as a going concern at the end of its 2018 financial year. The group embarked on a three-year turnaround plans last year, which was delayed as it introduced new management across the group and tried to stabilise its business. Before yesterday's decline, its shares were down 92% for the year.

The company offering to buy DAWN out is owned by Derek Tod and Luis Baeta. Both own a small number of shares in DAWN in their personal capacity. Tod led the group until mid-2016.

In the year to end-March, DAWN reported a 19% decline in revenue to R3.5 billion and an operating loss of R330 million, from a R482 million loss the previous year. Despite the smaller losses, its auditors cast doubt on its ability to continue as a going concern due to the uncertain outlook for the SA economy, on which its business is dependent.

Although the company reduced its debt with the R358 million raised in last year's rights offer, debt levels remained high. It also raised R374 million through the sale of its interest in Grohe DAWN Watertech and a number of smaller businesses, helping to further reduce debt and boost liquidity. Net debt declined to R25.7 million from R367 million, bringing its gearing down to 8.2% from 86.8%.

The release of its interim results for the six months to end-September is imminent.

DAWN said it had convened an independent board to value the terms and conditions of the proposed scheme and that BDO Corporate Finance had been hired as the independent expert. The "Offeror" had been given a 120-day period of exclusivity during which it can't accept a competition transaction.





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