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Troubled Basileus Capital wants to swap assets for BK One shares

BK One the intended home for seven companies with an unknown value.

JOHANNESBURG – Basileus Capital, a company reeling after the recent death of its controversial CEO, wants its assets listed on the JSE.

On Tuesday JSE-listed BK One announced that it had signed binding a memorandum of understanding in terms of which it would buy assets from Basileus Capital. BK One plans to issue shares to pay for these assets.

Basileus Capital started business rescue proceedings this month after the death of CEO Julian Williams on July 26.

BK One says it entered discussions with the business rescue practitioners regarding the “targeted acquisition” of selected assets in the Basileus Capital portfolio.

At the time of writing, BK One executive director, Dean Richards had not returned requests for comment.

BK One plans to buy seven companies, three of which it already has an interest in. The purchase price will be 90% of a value determined by the business rescue practitioners and confirmed by an “independent valuer appointed by BK One”.

No estimate was provided for the transaction’s total value. The transaction is described by BK One as “indivisible”, which suggests that it if it does not buy all seven companies, then the deal fails.

The proposed assets to be bought are:

  • Pure Ocean, a company involved in aquaculture, or fish farming. BK One currently has a 7.7% interest in Pure Ocean. It plans to buy another 86.3%.
  • Cash management company Cash Connect. BK One has an existing R33.8m loan to Cash Connect. It plans to buy 76% of the company.
  • IT company Kawuleza Connect. The deal would see BK One buying Basileus’s 77% interest in this company.
  • Lefatse Minerals, an exploration company in business rescue. BK One plans to buy Basileus’s 98% stake in the company.
  • Tor Oil Infrastructure Construction (Toroic), a company established in order to pursue “niche opportunities within the oil storage infrastructure sector. Basileus Capital owns 100% of Toroic.
  • BK One plans to buy Basileus’s 94% interest in Burgan Oil, a “fuel infrastructure” business.
  • Agriculture company Agri Tech, which is 82% owned by Basileus Capital.

Explaining the rationale for the purchase, BK One says it has developed an understanding of the potential value of the assets, and is, in the board’s assessment, “ideally placed to extract full value from these [assets] over their respective investment cycles”.

It also said the transaction will allow it to “rebrand and restructure in order to create a more efficient and transparent structure within which to develop its portfolio companies”.

BK One said it is not yet sure whether the transaction will be funded with ordinary shares or preference shares. Its existing portfolio, which was last valued at R231m, is held by investors through preference shares. BK One’s preference shares are listed on the JSE. Its ordinary shares are not.

The proposed deal is subject to approval by the JSE, competition authorities and the Takeover Regulation Panel. It is also subject to conditions, one of which is the availability of finance to enable the businesses to operate. Approval of BK One’s shareholders may also be necessary.

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