Trading Day – Blue Label Telecoms concluded agreements to restructure and refinance Cell C

Blue Label Telecoms has concluded a series of agreements with Cell C and its financial stakeholders to restructure and refinance Cell C. 

Thungela CFO, Gideon Frederick Smith, sells R22.7 million worth of shares across three transactions before the ex-dividend date.

In other news, The US Fed raised interest rates by 0.75% as expected, bringing their benchmark interest rate to a range of 3% – 3.25%.

Here is the biggest news of the day.

• Blue Label Telecoms has concluded a series of agreements with Cell C and its financial stakeholders to restructure and refinance Cell C. The company has debt owed to secured lenders of around R7.3 billion. Among the arrangements is a new loan of R1.03 billion from The Prepaid Company (TPC), a wholly-owned subsidiary of Blue Label, as well as a rights issue. Following the rights issue, TPC will hold a 49.5% stake in Cell C. Cell C will settle the creditor’s claims to an amount of 20c to the Rand unless they have elected to remain invested through an additional loan agreement or by participating in the rights issue.
• Thungela CFO, Gideon Frederick Smith, sells R22.7 million worth of shares before the ex-dividend date. The sale occurred across three transactions on 16, 19, and 20 September. Smith sold 60 000 shares for an average price of R378.45.
• Rand Merchant Investment Holdings will transition to OUTsurance Holdings following unbundling of other investments. The company reported good results, having successfully unbundled its stake in Discovery and Momentum for a combined market value of R34.6 billion and was able to pay a special dividend of R2.2 billion in addition to a normal dividend of R1 billion. The company’s market cap hardly moved, declining less than R6 billion from R48 billion to R42.6 billion. The group also sold its 30% stake in Hastings for R14.6 billion. Outsurance comprises 95% of the remaining assets in RMI, effectively giving investors a pure play on the company.
• Luxe dismisses external auditor for failing to complete the audit in time. The company terminated their relationship with Nexia SAB&T with immediate effect. Luxe has appointed Ngubane and Company as their new external auditor, with Magen Naidoo as the designated audit partner, to complete the audit for the financial year ending February 2022. Luxe commented that no reportable irregularities have been brought to the attention of executive management or the Board but that there was a strained relationship between executive management and Nexia due to them not completing the audit within four months of the financial year ending. The delay in audited results has led to Luxe being suspended from trading on the JSE.
• City Lodge stems losses and gets close to profitability again. The company reported earnings per share of R0.14, compared to a loss of R1.61 per share last year. However, headline earnings per share (HEPS) remained negative at -R0.09. Revenue has doubled from last year and now stands at R1.1 billion. This was due to an increase in the average occupancy rate from 19% to 38%. The company did not declare a dividend for the year.
• South Africa’s inflation rate decreased from 7.8% in July to 7.6% in August. The decline is primarily due to the decrease in fuel prices, which has been one of the primary drivers of the country’s inflation rate. The other big driver, food prices, still surged 11.5% from last year. Despite the slight easing of CPI, The South African Reserve Bank is still expected to raise the repo rate by 0.75% today, following in the footsteps of other central banks to prevent a further weakening of the rand and inflation on imported goods.
• The US Fed raised interest rates by 0.75% as expected, bringing their benchmark interest rate to a range of 3% – 3.25%. The meeting had a very hawkish tone overall, and it is expected that the Fed will raise rates by a further 1% – 1.25% over its next two meetings before the end of 2022.
• The Bank of Japan has elected to keep its ultra-low interest rates at -0.1% despite the Yen being at 24-year lows. The country has been battling a fragile economy with deflationary pressures for many years. The country’s core inflation in August was only 2.8%, which is above its 2% target.
• Hong Kong’s central bank raises rates from 0.75% to 3.5%. Hong Kong tracks U.S. interest rate moves because its currency is pegged to the U.S. dollar.