MultiChoice is tenfold bonanza Dec 2 2011 9:33AM
Subscribers to the MultiChoice black economic empowerment scheme could potentially sell their stock for up to R117 a share when the lock-in period lapsed yesterday, despite having paid just R10 five years ago.
The end of the five-year lock-in will allow the 120000 shareholders to freely trade their shares in Phuthuma Nathi, as the scheme is known. Subscribers paid only R10 a share with 80% (R40) of the actual price of R50 funded by MultiChoice’s holding company, Naspers.
Naspers funded the transaction through Phuthuma Nathi issuing preference shares.
The median fair value of the share stands at R116.7, according to 10 independent stock market analysts MultiChoice commissioned to do a price evaluation.
“The value of the shares will be determined through the bidding and selling process on the market once trading opens,” said MultiChoice CEO Imtiaz Patel. “It is important to note that the prices suggested by the analysts could very well be substantially reduced because the shares can only be traded between BEE qualified investors.
“ This restriction reduces the number of people who can buy and sell the shares, making the available market smaller than would normally be the case.”
Similar schemes have tended to trade at significant discounts to what could be considered fair value and were illiquid. The Sasol Inzalo scheme and African Bank’s Eyomhlaba are cases in point.
Patel urged Phuthuma Nathi subscribers to tread carefully when trading in the stock. The obtaining tough economic conditions might tempt some to cash in which might not necessarily be the best thing to do.
“We are concerned that shareholders do not lose value hence we encourage them to hold onto their shares.”
MultiChoice executive chairperson Nolo Letele said the scheme had been successful having paid R2bn in dividends from inception five years ago to date. “We paid dividends for the very first year. Ordinary dividends grew from 43.3c per share in 2007 to 88.89c per share this year. Special dividends due to Phuthuma Nathi companies were used to reduce debt.”