Transaction Capital is proceeding with plans to demerger and separate listing of its WeBuyCars (WBC) business on the JSE's main board, a move that sent the company's share price up more than 10% in morning trading on Wednesday.
The group confirmed the decision in a Sens announcement published at 5.30pm after markets closed on Tuesday.
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Transaction Capital stock price
“We would like to inform our shareholders that the Board of Directors has resolved in principle to pursue a demerger…The nature of the demerger has not yet been finalized. If approved by the Board, the bundle will be subject to performance. The cancellation will be carried out. [or where permissible, waiver] It provides for unbundling terms that are standard for transactions of this type.”
“The split will be effected by a pro rata specie distribution of WBC shares held by Transaction Capital on the relevant distribution date…WBC shares will be simultaneously listed on the main board of the JSE,” it added.
The group first touted the separation and separate listing of WeBuyCars along with the subsidiary's founders during its 2023 financial results announcement in December last year.
“WeBuyCars is unlisted…It is intended that, concurrently with the demerger, all of WBC’s shares will be listed on the main board of the JSE. Therefore, in terms of paragraph 5.85 of the JSE Listing Requirements, shareholder approval is not required for the demerger. ” Transaction Capital noted in its latest Senate report.
“This separation is deemed to be a disposal of a significant portion of assets or an assumption of transaction capital under Article 112 of the Companies Act and therefore requires shareholder approval by special resolution. Article 115(3)(a) of the Companies Act. “Based on the provisions of the Act,” he added.
Impact of SA taxis
Transaction Capital pointed to its majority stake in three underlying businesses: Moblyz (SA Taxi and Gomo), WeBuyCars and Nutun as part of the rationale for the split.
“Given SA Taxi’s disappointing performance in 2023 and the negative impact this has had on the broader Transaction Capital Group, Transaction Capital has decided to focus on extracting shareholder value from its existing portfolio of companies. ” the company said.
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The group said it aims to achieve the following at the holding company level:
- Significantly reduce debt levels
- Removes the currently placed cross-default trigger.
- Eliminate WeBuyCars' put option liability. and,
- Settle R285 million in share compensation for Santaco (South African National Taxi Council) if payment is required. This would be consistent with the purpose of the partition if approved.
Transaction Capital highlighted that WeBuyCars has a “unique position in South Africa's large and highly relevant used car market, giving it significant growth potential.”
“In fiscal year 2023, [FY2023], WeBuyCars achieved key performance indicators, including increased sales volume and market share expansion. “Profit decreased in the first half of fiscal 2023, but business performance recovered significantly in the second half.”
“Despite unfavorable market conditions, this positive momentum continued into 2024.”
“Once unbundled, shareholders will have the opportunity to have direct access to market-leading assets. With a significant national footprint of 74 buying pods in our auto supermarkets, we differentiate ourselves from other players in the local used car market.
“If WeBuyCars goes public, it will be led by its founders and an experienced long-term management team,” Transaction Capital added.
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