Sefcash to be de-listed in cost cutting measure

Brian Benza
Staff Writer | Friday August 13, 2010 00:00

The move is calculated to cut the listing costs of the two companies.

Sefcash, which is Sefalana's only listed subsidiary, is currently 79.35 percent owned by Sefalana, while the remainder of the shares are free float as required by BSE.

Apart from Sefcash, Sefalana holds total or part equity in Foods Botswana, MF Holdings, Kgalagadi Soap Industries, Commercial Motors and a range of other interests in industries such as timber, mechanised farming, travel and tourism and property.

As part of the process of ultimately de-listing the subsidiary, Sefalana has offered to buy all of the issued stated capital of Sefcash that it does not currently hold (20.65 percent). In return, it offers minority shareholders 4.5 new Sefhold shares for every single share it owned in Sefcash.

Paving way for the deal to be completed, BSE officials say Sefcash shares are suspended from trading on the bourse beginning Wednesday this week pending approval of the scheme of arrangement by shareholders.

'The rationale of the transaction is basically to cut all the costs associated with being a listed company,' says one BSE official.

'The shareholders must have realised how expensive and unsustainable it was to have two listed companies that basically have the same principal shareholder.

'Once the shareholders have approved, a High Court consent will be sought as required by the Companies Ac. Sefcash will then apply to be de-listed, which should happen around the 15th of next month.'

In response to a question regarding how much Sefalana will save by de-listing its Sefcash, the CEO of the transaction's sponsoring broker Stockbrokers Botswana, Geoff Bakwena, says it is difficult to estimate the costs of sustaining a listing because the fees differ with the amount of issued shares and the number of shareholders.

Apart from BSE fees, which include a maximum P100,000 sustaining fee and P400 in annual review fees, there are many other costs which range from legal advisory fees, accounts and transfer secretaries.

'As per BSE regulations, listed companies must have a minimum of 300 shareholders all of whom must receive financial statements and dividend cheques at least twice a year,' the BSE official explains.

'Although we now have the CSD (Central Security Deposit), it is not compulsory; some companies still use transfer secretaries which comes with the costs of printing certificates and postage.' Sefalana's Sefcash is the domestic leader in the highly competitive Fast Moving Consumer Goods (FMCG) arena. It boasts an arsenal of cash and carry outlets and hyper stores at wholesale level.

Sefcash also has 400 voluntary retail franchise members and a portfolio of powerful branded products. Last year, Sefalana unveiled Shoppers, a chain of wholly-owned retail outlets that upped the stakes in the FMCG retail arena, already staggeringly competitive.

Shoppers outlets have been opened in Mochudi and Letlhakane. A further 19 stores are planned for the next three years. The outlets are already proving popular, with an estimated 6672 customers walking into the Mochudi store upon its official opening.