OneLogix, the JSE-listed niche logistics provider, is aiming to have completed a proposed management buyout and the delisting of the company from the JSE by about April or May this year.
However, CEO Ian Lourens warned on Thursday that there are a number of provisions to this estimated timeline.
Lourens added that nothing of major consequence has to take place to finalise the proposed transaction but it is a management buyout “and all the fine tuning relating to that has still got to take place”.
He also confirmed that OneLogix must still make a formal offer to shareholders.
Listen: OneLogix CEO Ian Lourens discusses its interim results results to end-November, changes in the business and expectations for the year
It said its board of directors is considering a potential delisting via a cash offer to shareholders of R3.30 per share, which represents a 32.5% premium to the 30-day volume-weighted average price (VWAP) of R2.49 per ordinary share as at the JSE close of trading on December 17 2021.
The announcement also gave some details of motivation by OneLogix’s board for the transaction.
It said: “Trading in OneLogix’s ordinary shares has been characterised by extremely low liquidity. This is due to its tightly held strategic and controlling shareholding which has deterred potential institutional investor interest in the company’s shares.
“In recent years, share trading statistics reflect the company, through its general repurchase programs, as the only meaningful source of liquidity available to shareholders wishing to trade their shares.
“In the context of the above, and given the substantial costs associated with a listing on the JSE, the board of directors of OneLogix is considering a potential delisting of the company’s shares from the securities exchange operated by the JSE,” it said.
On Thursday Lourens said he was unable to provide firm dates for the formal offer and the proposed delisting but added that “we would like to do it sooner than later”.
“We have already had one renewal of the cautionary and we are hoping we don’t have another one. If that is the case, it’s probably about two months or so [to finalise it],” he said.
In terms of the lack of liquidity in OneLogix’s shares, Lourens said management owns a total of 49% of the shareholding of the group.
He added that the group’s broad-based black economic empowerment (BBBEE) ownership component, including the group’s empowerment partner Kagiso Capital and the group’s staff share participation scheme, own about 20% of the group’s shareholding.
“So that is nearly 70% out of just those two,” he said.
OneLogix on Thursday reported a 21% increase in revenue to R1.49 billion in the six months to end-November, with earnings before interest, tax, depreciation and amortisation (Ebitda) improving 14% to R213.7 million compared with the corresponding period in the previous year.
However, headline earnings per share (Heps) slumped by 89% to 1.1 cents per share from 10.1 cents per share.
Lourens attributed this decline to three issues:
The on-boarding of additional vehicle storage facilities, as part of the third phase of the Umlaas Road logistics hub in January 2021, contributing an additional R32 million in lease-related costs in the reporting period compared with the prior period.
The civil unrest and arson in KwaZulu-Natal in July 2021.
A freak hailstorm in September 2021 that caused R25 million in damage to passenger vehicles at the group’s leased Umlaas Road facility after deducting the cost of repairs covered by insurance.
In regard to the R32 million in additional lease-related costs, Lourens said OneLogix VDS and OneLogix Trucklogix, which form part of the largest segment contributor to the group, continue to be hamstrung by depressed storage volumes due to global supply chain disruptions impacting the supply and delivery of passenger and commercial vehicles.
Lourens said OneLogix developed the Umlaas Road facility itself and then sold it in terms of a leased back agreement.
“We have got to get revenue to cover that R32 million additional lease cost and right now the revenue is not covering it,” he said.
Lourens said OneLogix is comprehensively insured, which includes SA Special Risk Insurance Assurance (Sasria) cover in respect of damage to assets, and the settling of the claim for damage caused during the civil unrest in July 2021 is at an advanced stage.
However, the group still suffered from the opportunity cost of the business it had to forego because of the unrest.
Lourens said the hailstorm and unrest were two once-off events but the estimated impact of the hailstorm was to diminish OneLogix’s Heps by 8 cents per share and the unrest by an estimated 3 cents per share.
“Just adding back those two items, we would be better than our previous comparable period.
“We are not panicking. The business is still helluva strong,” he added.
Lourens is anticipating a better next six months despite the second half of the group’s financial year generally always being a bit down compared with the first six-month period, as it includes both Christmas and Easter.
“We have had two months of this next six-month period and I think we are going to be looking fine.
“We are not pessimistic. We are cautiously optimistic about the next six months,” he said.
Lourens said the group also took heart from the strong new vehicle sales figures in January 2022.
New cars sales increased year-on-year by 26.6% and total new vehicle sales were 19.5% up.
“We had a good January, as you can imagine,” he said.
But Lourens said motor vehicle related business now only constitutes about 10% of total group revenue and once everything is back to normal and assuming the once-off events do not reoccur, Vehicle Delivery Services (VDS) will constitute about 35%, or a maximum of 40%, of the group’s business.
He highlighted that the group is diversified and, of its 13 businesses, only two are involved in the vehicle industry, with the remainder active in agriculture, liquid bulk and freight clearing and forwarding.
Shares in OneLogix were trading 0.34% higher at 11am on Friday after closing overnight at R2.96.