Brait Consoles itself

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Brait Consoles itself

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Published Date: 2021-11-29 | Source: INCE|Community | Author: The Finance Ghost

Brait Consoles itself

It was a busy week for Brait last week. The announcement of a R3 billion capital raise was a headline-grabber of note, especially given the depressed nature of the Brait share price and the struggles at core asset Virgin Active.

News of a new variant definitely won't do Virgin Active any favours, so Brait will need every cent of that R3 billion to keep its underlying operations in one piece over the next few months.

There's finally some good news for the group, as Consol Holdings (which tried and failed to list on the JSE and raise R3.5 billion in 2018) is set to be sold to Ardagh Group for an equity value of R10.1 billion.

Ardagh is a leading global supplier of glass and metal packaging.

The deal includes Consol's operations in South Africa, Nigeria, Kenya and Ethiopia. That means that there will be some regulatory hurdles along the way and a few competition regulators to get past, so the deal is only expected to be completed in the second quarter of 2022.

Critically, Brait will receive proceeds of around R400 million for its effective look-through interest in Brait IV private equity fund's investment in Consol. This is a 37% premium to the audited March 2021 valuation of the interest in Consol and a 16% premium to the carrying value at 30 September 2021.

In other words, on any other day when the world isn't exploding, this would've been good news for the share price as it transforms an asset trading at a deep discount on the market into cold, hard cash.

The proceeds will be used to partially repay the bank debt revolving credit facility. That facility has been extended to 30 June 2024 and will have a facility limit of R3 billion post the rights offer that was also announced last week.

Brait was down 1% for the day, so this news helped cushion the blow on a deeply red day for the markets.





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