TRADING
Education fund may smooth way for Shoprite’s Basson repurchase
Analysts warn minorities will be reluctant to back the proposal
The establishment of an R84m fund to educate previously disadvantaged individuals might help to secure sufficient shareholder support for Shoprite’s plan to repurchase R1.7bn worth of shares from former CEO Whitey Basson. But analysts say minorities will be reluctant to back the proposal. The repurchase will be funded by short-term loans, which will increase the retailer’s interest costs by R137.4m a year, or about 30% of its interest burden now. Jean-Pierre Verster, a portfolio manager at Fairtree Capital, said the repurchase would be a drain on cash resources. Analyst Syd Vianello said given that the repurchase needed a special resolution requiring 75% shareholder backing, it could not be assumed to be a done deal. Chairman Christo Wiese has 46% of the voting power and may have the backing of the Public Investment Corporation (PIC), which has 10.5%. But given the controversial nature of the deal, Vianello said it was difficult to forecast the outcome. The R84m going to the educati...
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