- Sisa Ngebulana's Rebosis says it is in negotiations with investors for a possible transaction that could change its fortunes.
- The company has been drowning in debt, sparking fears that it may soon go under.
- Rebosis says if the negotiations go well, the transaction could "fundamentally" change its financial matrix.
It looks like the debt-laden Rebosis might be thrown a lifeline. On Wednesday morning, the property company founded by Sisa Ngebulana announced on the Stock Exchange News Service (SENS) that it is currently in negotiations with local and offshore institutions and pension funds for a possible transaction that could change its fortunes.
"If successfully concluded, [the transaction] could fundamentally change the financial matrix of Rebosis and crystallise value for shareholders," wrote the company in the SENS statement.
Rebosis didn't give further details saying that the company has signed non-disclosure agreements. But it said that if concluded, the transaction would be classified as a category 1 requiring a circular and shareholder approval, meaning that it's a significant deal.
Rebosis debt problems have got out of hand. At the end of its 2020 financial year, the company's net debt stood at R9.5 billion when it only had R13.5 billion in total assets.
The company's loan-to-value ratio (LTV) reached 75.7% in 2019 and had still not stabilised at the end of its financial year in August 2020 as it clocked 72.4%
LTVs are used to gauge the debt levels of different listed landlords. In 2020 other listed property companies also recorded a rise in their LTV ratios as tenants struggled to pay their rent. But most of Rebosis's peers are trying hard to get their ratios below 40% again. Some, like Hyprop Investments, have already brought it below 40%.
Rebosis has been trying to sell some of its assets to reduce the debt, including Mdantsane Shopping Centre that the company sold to Vukile Property Fund.
The market has been worried since 2020 that Rebosis will not be able to survive past the current pandemic. Those fears were exacerbated earlier this year when one of Rebosis's shareholders, businessman Zunaid Moti, took the company's major shareholder, the Amatolo Family Trust, to court, claiming it was insolvent.
- READ | Jet-setting property billionaire Ngebulana's firms headed for 'financial demise,' claimant says
In the same announcement about the potential saviour transaction, Rebosis announced that it was currently reviewing its board's composition. It appointed two additional independent non-executive directors, Mervyn Burton and Shaun Naidoo, who joined on 1 April 2021.
At the same time, Rebosis said Maurice Mdlolo has resigned from the board and as the chairperson of its investment committee effective on the same day that the new directors joined.