Namibian businessman Quinton van Rooyen, through his family’s investment vehicle Next Capital, has proposed a significant financial maneuver to bolster Trustco Group’s financial stability and reduce the risk of default.
In a landmark move for the investment holding company, Next Capital has offered to convert a loan of NAD1.4 billion ($73.3 million) into ordinary Trustco shares.
This strategic initiative is set to have a profound impact on Trustco’s financial structure. Under the terms of the proposal, Next Capital will be entitled to convert the NAD1.4-billion loan into one billion and fifty million new ordinary Trustco shares, all at a fixed price of NAD1.41 ($0.0737) per share.
Importantly, the loan will cease to accrue interest once approved by the shareholders. Furthermore, these conversion terms will remain unchanged regardless of Trustco’s share trading price or listing status. If the entire loan is converted, Next Capital’s shareholding in Trustco will surge to 69.8 percent of the issued shares.
Van Rooyen, Deputy CEO of Trustco, described this move as a historic moment for the company. He emphasized the significance of Next Capital’s capitalization offer, highlighting the confidence it reflects in Trustco’s vision and long-term growth strategy.
“We appreciate their foresight in providing us with this opportunity to enhance shareholder value and pursue new opportunities in our market,” he said.
He also noted the recent fluctuations in Trustco’s market capitalization price, which had dwindled from an all-time high of NAD15.6 billion ($817 million) in January 2019 to a mere NAD237 million ($12.4 million) in July 2023. With the current market price at 50 cents per share, the capitalization offer is seen as a substantial premium.
The recent disclosure follows Trustco Group‘s strategic move earlier this month to shore up its share value through the launch of a share buyback plan. Valued at up to R99 million ($5.3 million), this initiative is designed to counter recent significant declines in Trustco’s share price on the Johannesburg Stock Exchange.
The buyback program is scheduled to commence on Sept. 1, 2023, and will run until approximately Nov. 30, 2023, aligning with the release of the company’s annual audited financial results.