Media group Media24 announced on Thursday plans to buy out all shareholders of Welkom Yizani, its black economic empowerment share scheme. The media group is proposing to pay R15.70 per Welkom Yizani ordinary share.
The proposal is subject to the approval of Welkom Yizani shareholders at an extraordinary general meeting scheduled for 22 January 2021.
Investors paid in a subscription of R10.00 per share at the establishment of the scheme in 2006. Then scheme’s shares were listed for trading on an over the counter platform on 9 December 2013. The shares were stuck at R10.00 for more than a year and at one point sunk to R3.50.
Following the implementation of the offer, Welkom Yizani would be delisted from the Equity Express Securities Exchange (EESE) and the scheme then unwound.
“We started the Welkom Yizani scheme with the best intentions 14 years ago, when print media was flourishing,” Rachel Jafta, chairperson of the Media24, said in a statement.
“However, nobody could have anticipated the rapid decline in print advertising and circulation as advertisers and readers globally shifted to online platforms.”
The Welkom Yizani independent board subcommittee has appointed an independent expert to consider the offer price of R15,70 per share.
“I believe that this is a great opportunity for our loyal Welkom Yizani shareholders to realise a decent return on their investment,” Ishmet Davidson, CEO of Media 24, said.
“The return is projected to be some 3.6 times the original investment for those on board since the inception of the scheme.”
Welkom Yizani holds a 15% stake in Media24; a print media dominated operation within the Naspers stable.
Media24 is one of the largest media companies in the country with massive exposure to the struggling print media. Its assets include well-known titles like City Press, Daily Sun, Beeld, Rapport and a host of knock and drops and magazines and printing assets.
“Value realisation by Welkom Yizani shareholders is also impeded by the illiquidity of Welkom Yizani’s shares, with historically less than 0.01% of shares traded daily on average,” Ashoek Adhikari, an independent director of Welkom Yizani said.
“Furthermore, there appears to be limited appreciation for the value of Media24 in the public market. We thank the board of Media24 for not abandoning Welkom Yizani shareholders to their fate, but stepping in with a solution that offers a real and immediate benefit.”
Adhikari added that for many years Welkom Yizani shareholders have been dissatisfied with the performance of the share price.
“This Media24 offer provides all shareholders with an equal and simultaneous opportunity to sell their shares. The Welkom Yizani independent board subcommittee believes the offer price and terms are higher than that achievable through an open-market, piecemeal sale by individual shareholders; particularly when regarding the historical trading performance.”
Welkom Yizani, Media24’s broad-based black economic empowerment scheme, began trading its shares on the Equity Express Securities Exchange (EESE) in November 2018.
In 2016, Naspers, a preference shareholder in Welkom Yizani, waived R434 million in preference share debt and accrued interest owed by Welkom Yizani under scheme rules.
To date, R283 million has been paid to investors in the dividend.
The major shareholders (top five) of Welkom Yizani are The Rubato Trust (8%), The Kumbule Trust (2%), Sello Soulman Nakedi (1%), Naspers Opvoedingtrust (1%) and Prevesh Hemrajh (1%).
The remaining shares are held by a vast group of individuals and other entities.