South African businessman Barry Swartzberg has pledged 5.5 million Discovery Limited shares worth over R796.9 million ($52 million) as security for an R187-million ($12.2 million) financial obligation.
In accordance with the Johannesburg Stock Exchange’s listing rules, Discovery Limited issued a trading update, stating that Swartzberg, who played an integral role in Discovery’s growth, has entered into a security arrangement related to an existing financial obligation.
The $12.2-million obligation, which prompted Swartzberg to execute an off-market pledge and cession transaction, is for preference share funding with a three-year term from Dec. 20, 2022 to Dec. 1, 2025.
Swartzberg is prohibited from selling the pledged shares and cannot earn dividends until the financial obligation is met, according to the security arrangement.
Despite ceding core control over the 5.5 million shares pledged as security for the obligation, the South African businessman still owns 3.93 percent of Discovery Limited, or 25,837,342 shares.
Since co-founding Discovery with fellow South African businessman Adrian Gore in 1992, the leading financial services provider has evolved into a major player in the insurance industry.
To overcome obstacles and ensure the long-term viability of its business, Discovery has partnered with AIA Group, a Hong Kong-based multinational insurance and financial organization, to establish a pan-Asian health insurance technology business.
As of press time on June 8, shares in Discovery Limited were trading at R138.3 ($9.02), 13 basis points lower than their opening price on the Johannesburg Stock Exchange this morning.
Discovery’s market capitalization is currently valued at R93.7 billion ($6.11 billion), while Swartzberg’s 3.93-percent stake is valued at R3.68 billion ($240 million).