Africa-Press – Botswana. Grit Real Estate Income Group, the tri-listed company boldly defended its controversial share-swap with Botswana Development Corporation (BDC) saying that the price which they exchanged their shares to the latter was fair.
The company is on London Stock Exchange (LSE), Johannesburg Stock Exchange (JSE) and the Mauritius bourse.
On June 30, 2019, Grit acquired 66,500.00 shares from Letlole La Rona which were held by BDC in exchange for 9,0839 511 shares from Grit.
At the time, Grit acquired BDC shares at 225 thebe per share and gave BDC its own shares at 140 American cents when they were worth 120 cents or 93.5 pence per share- leading to BDC losing over P20 million upon signing the deal.
“At the time of this particular transaction, and as is usual in the real estate transactions, the swap ratio was done with independently appraised values of both businesses – which is the fairest way to value a deal as it excludes any short term stock market pricing anomalities,” Darren Veenhuis, head of Corporate Finance and Investor Relations at Grit told.
Upon the share swap, Grit shares plunged to 33 pence per share eroding BDC value in Grit and has been trading at those low levels for over three years. The latest being an outlandish down spiral to 28 pence per share. On the opposite side, LLR shares have been trending up to around 310 per share.
eter Todd who is the Grit Chairman bemoaned the Covid-19, Russia-Ukraine conflict and the upward interest rates hikes- especially in Africa for the bad performance of his company.
In the last annual financial report, he said the key things that his company will be focusing on will be reducing its Loan-To-Value (LTV), to more acceptable levels that will be below 50 percent.
He said other measures that included capital raising and assets re-cycling were on the table.
The board set an assets recycling of 20 percent of the value of the property portfolio, equivalent to US $ 160 million worth of property assets by December 2023. The move triggered the selling of Absa House in Mauritius, selling of shares in LLR and selling of shares to LLR in Orbit Complex in Kenya. Grit has raise well over P 135 million by selling its shares in LLR. And it further raised US $ 7.2 million by selling shares to LLR in Orbit.
Grit started selling its shares in LLR from last year through to March this year.
“Our board embarked on a strategic review and found out that LLR were non-core assets and that is why we are selling,” Oteng Keabetswe said, referring to Grit, from his new office in Mauritius.
In the last trade on March 8, 2023, Grit praised itself for having made sale of 6,421,000 shares on Botswana Stock Exchange (BSE), which amounted to P 22.5 million or US $ 1.7 million.
This was hot on the heels of another sale in December and February this year, were they raised almost US $ 9 million.
LLR is valued at P 1.2 billion while Grit market capitalization is at 155.1 million Sterling pounds or just shy of P 2.6 billion.
Keabetswe who was sitting on the board of LLR on behalf of BDC resigned from the latter in April 16, last year.
Keabetswe was a cork in the investment committee of LLR.
LLR has rebuffed attempts by Grit to manage its assets in Botswana and also rejected a proposal to increase its shareholding in Orbit by a further 20 percent at the cost of US $ 7.6 million.
Corporate governance guru said Keabetswe’s “moves are scary at the least, but most importantly illegal”.
Keabetswe told that he is leaving the board of LLR.
“I have informed the board of LLR that I am resigning,” he said.
Keabetswe was the highest paid board member at LLR netting P 573 905.00 per annum for attending 12 meetings over 12 days in a year. The company spent over P 2.7 million in board member sittings during the period ending last December- nearly four times its peers in listed companies in the property market.
It was even higher than LLR principal shareholders being BDC and Botswana Public Officers Pension Fund (BPOPF).
BDC has assets valued at over P5.1 billion and 40 percent shareholding in LLR. Its highest paid board member gets P46, 350 while BPOPF which stands at P 90 billion and 28 percent in LLR has its highest paid board member netting P353, 600.00.
Veenhuis told that the assets recycling exercise is going well as they have now sold assets worth US $ 126 million.
“Therefore with the asset re-cycling strategy, you will reasonably conclude that the disposal of its assets in LLR is relatively small in the context of the overall recycling targets,” he said.
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