THE BOTTOM LINE
Uh-oh, Brait isn’t telling us something, and it’s not nice
After posting a R9.7bn annual loss it revealed two worrying transactions – but kept schtum on the details
Jittery Brait investors, whose shares have collapsed in value over the past two years, were given more reason to feel uneasy on Tuesday. Aside from posting a R9.7-billion loss for the year to March (following a R16-billion loss the previous year), the investment holding company revealed two worrying transactions.That it did so with little transparency is even more cause for concern. Given the corporate malfeasance of recent months (and the clouds surrounding Brait’s 35% shareholder, Christo Wiese), you would think the company would have the good sense to give as much detail as possible. Leaving room for interpretation leaves people assuming the worst.
And judging from the social media backlash, that is exactly what happened.
But even with more information, neither of the transactions shine a favourable light on Brait. For one, it is on the hook for R1.9-billion relating to share-backed loans extended to its investment team to buy shares in the company. Brait would need to pay up if, when the loans mature in December 2020, they are not extended, refinanced or repaid.
The second nasty surprise comes in the almost-but-not-quite co-investment it did with Wiese’s investment company, Titan.
Titan has since walked away from the deal, with Brait taking on debt of R1.4-billion to buy as yet undisclosed listed securities. Taking out fixed debt on a floating asset is always risky, and the investment has already posted a notional loss. But it is Brait’s overall lack of disclosure that should worry investors more.