SOUTH AFRICA – JSE-listed investment holding company, Grand Parade Investments (GPI), is unbundling its stake in restaurant chain Spur Corporation, as part of its strategy to unlock value for its shareholders.
The group which owns 9.28% of the total issued share capital of Spur, said a total of 8,447,731 Spur shares valued at about R174 million (US$10.7m) based on the restaurant chain’s current R20.65 share price, equivalent to 37 cents per GPI share, would be unbundled and distributed to GPI’s shareholders.
The investment company said its shares are currently trading at a discount of more than 20%. The unbundling will enable its shareholders to own Spur stock directly, and not through GPI.
“The unbundling of the Spur shares is aligned with GPI’s strategy to unlock value by reducing the discount at which GPI shares trade, relative to the intrinsic net asset value of GPI’s underlying assets.
“On completion of the unbundling, the Spur shares held directly by shareholders will be valued at the market value thereof, as opposed to a discount to market if held through GPI,” GPI explained.
GPI CEO Mohsin Tajbhai admitted GPI’s first option was to sell its Spur interest but a sale would’ve had to have been at a significant premium because Spur, in GPI’s view, is trading below fair value.
He said if GPI had sold its Spur interest at current share price levels, certain GPI shareholders would have questioned why it had done so and not waited and got more for it.
“We wouldn’t want to sell at these levels and prejudice our shareholders. We were looking to try and sell at a significant premium. Unfortunately, we weren’t able to close the deal,” said Tajbhai.
“We have unlocked the value, which is what we said we would do, and the shareholders can decide whether they want to hold it for a longer period of time to see whether there is Spur upside in the future,” he added.
Spur Corporation is upbeat about the future as it has set in place strategies to ensure its future growth. For instance, the company opened its first Spur Drive Thru in June 2021 and has been well received by customers.
Also, it launched its virtual kitchen (VK) brands during the first lockdown in 2020, with these continuing to gain traction and generating turnover for the year equivalent to the group’s smaller brands.
The unbundling marks GPI’s complete exit from the food sector as it sold Burger King South Africa late last year to Emerging Capital Partners (ECP), and its loss-making stainless-steel catering and refrigeration equipment manufacturer Mac Brothers in voluntary liquidation.
“We are now back to our roots. Over that period, we have also reduced debt, reduced head office costs and are essentially back to where we were before,” said Tajbhai.
GPI is now left with its 15% interest in SunWest, 15% interest in Golden Valley Casino and 30% interest in Sun Slots.