- To the Point Investments director Bernard Swanepoel discusses the future of Village (08/10/2008) Cameraperson: Danie de Beer Video Editing by: Darlene Creamer (4.41 MB)
“By January we will have a small company that is ready to be active in the market – which is more interesting every day. I’m certain that Village will have real assets (and not environmental liabilities) in a year,” Swanepoel stated.
To the Point bought Harmony Gold’s stake in Village, which was a listed JSE shell first incorporated in 1889, in July. To the Point also acquired a 10% stake from longstanding shareholder David Cobbet, who still holds a 13% interest in the company. The company then made a 100c a share offer to minorities also in July.
Swanepoel commented that the process to get Village back into business had, to date, been somewhat complicated and had taken frustratingly long.
Only a small number of shares were sold by the time the offer expired, but To the Point said at the time that it was already managing the company, so control was not an issue.
Swanepoel, who formed To the Point after his resignation last year as CEO of Harmony Gold, was coy when questioned about what specific commodities the company would be mining, saying only that the group was “playing the field, we are not yet ready to commit.”
“Our big decision will be, do we keep Village as a gold company? And there are really exciting opportunities in gold, or do we from day one make it a diversified company - probably to the exclusion of gold? Our first transaction will probably be the telling one, if it’s a gold transaction, then out of necessity we will be a gold company. But if it is, for example, in coal then we would build a diversified company in Village,” he said.
He noted that the company could be very interested in mining in Zimbabwe, as the money available would likely buy a lot more across the border, but also there were said to be some very attractive smaller gold projects in Zimbabwe, as well as possible coal opportunities.
MORE IMMEDIATE CONCERN
An extraordinary general meeting would be held on Friday, October 10, to get the Village house in order, and To the Point Investments would also seek permission to proceed with a claw-back rights issue, that would be fully underwritten by To the Point.
“The claw back says that from day one it's fully underwritten by us as To the Point, and it says that Village receives its full amount of money – we are contemplating about R20-million. So we put that R20-million in, and we get shares in lieu of that R20-million, at R1,10 a share. And that is for the shareholders to approve,” Swanepoel explained to journalists.
That would likely take To the Point beyond 48% shareholding, and, if it went over a 50% stake, which was the next critical point, the minority shareholders would waive their rights to receive a follow on offer.
“So we get all the shares, they get all the money, and then each shareholder has the right to claw back, so any shareholder that wants to follow his right can come and say, can I have my three rights in lieu of my one share, it works out to just about three shares.”
“Those rights are like nil-paid letters, and you can actually trade them. It will be very difficult, but theoretically you would have a right that you could sell to someone else,” Swanepoel reiterated.
To the Point expected that the Village shareholders would like it if those who wanted to put more money into the company could, and if those who didn’t want to put more money in, saw that cash being injected.
Swanepoel said that the advantages to the claw back rights offer was that the company had immediate certainty, as it was fully underwritten, every minority had the full protection that they would have had in a “more cumbersome” rights issue.
“Realistically I think there is a significant proportion of our share register which is dead, and therefore you would expect that they would not participate, and so we will claw up a little bit. My realistic expectation is that we will go up somewhere to 50%,” he said.
In January, the R20-million would be used as seed capital, as there were no salaries to be paid, and Village would start “scanning for opportunities”, and put that money into what Swanepoel calls “smart acquisitions”.
He indicated he would prefer to own assets outright, but if it was only possible to buy a smaller stake in a very attractive project, the company would not be averse to that.
Swanepoel conceded that R20-million confined a company to a rather small space in the resources sector, but maintained that the advantage of starting small was that there was significant growth potential.
To the Point Investments has also not been sitting on its hands while waiting for the laborious Village process to be concluded.
The investment company has built up a significant stake in Dengetenge Platinum – described as a next generation deep level platinum prospect, as well as having a stake in Delta Consolidated, which has coal prospects.