Letting Rex off the lead

EMPOWERMENT icon Brimstone looks set to cause a flutter among the corporate fashionistas and perennially fashionable value investors.

This week Brimstone signalled an intention to cast off its investment in fashion retailer Rex Trueform (RexTru).

Brimstone acquired an effective 34.6% stake in RexTru in late 2007.

At last count, the empowerment company’s interest in Rextru was spread as follows: 242 654 Rextru ordinary shares and 2.6 million Rextru N-shares as well as 254 126 ordinary shares and 3.7 million N-shares in Rextru’s pyramid holding African & Overseas Enterprises.

That’s a holding roughly worth R50m, but – more importantly – a holding representing a big chunk of a company which cannot, by any stretch of the imagination, be regarded as one of the JSE’s most liquid counters.

Despite the canine connotation of Rex – having been schooled in the classics at Muir College in Uitenhage, I do know Rex is actually latin for “king” – the company is no dog. Rextru, which owns the Queenspark fashion chain, has proved a remarkably resilient (and rewarding) business over the years.

Originally, Rextru was to form part and parcel of Brimstone’s longer-term plans to build a fashion brand house around its clothing manufacturing subsidiary, House of Monatic (HoM).

I suspect that plan is no longer on the table. And Brimstone directors admit as much in commentary that accompanies the company’s recently released year to end-December results.

In reference to the Rextru investment, they noted: “Events and developments within the clothing industry and specifically within Brimstone’s clothing cluster have given cause for Brimstone to review its strategy.”

Brimstone unlikely to be panicked

In this regard Rextru is no longer considered strategic, which means Brimstone is “actively pursuing opportunities to extract maximum value” from the Rextru investment.

For those that need reminding, Brimstone’s clothing cluster was dealt a heavy body blow when subsidiary Fifth Element was liquidated after some unsavoury business practices were uncovered in an internal investigation.

In any event HoM – which thankfully does hold some valuable industrial properties – posted a loss of R30m after factoring in write-offs and expenses.

Still, Brimstone probably won’t be panicked into selling Rextru. Indeed the empowerment company, which has a strong portfolio ranging from healthcare to fishing and assurance to insurance, can afford to sit back and collect the dividends from Rextru.

I reckon, though, Brimstone has done a clever thing in “putting out” its intentions for Rextru. It certainly would not surprise me to hear that Brimstone was inundated with polite calls of enquiry from interested parties – probably ranging from larger fashion retailers to private equity specialists.

I even wonder whether former asset manager Hugh Roberts, who already holds a sizeable position in Rextru, might be tempted to harness a bigger stake?

While there should be no shortage of buyers for Brimstone’s Rextru stake, there is a question around price. When Brimstone struck the deal to buy out Old Mutual’s stake in Rextru and Af&Over, the shares were trading at around 800c and 600c respectively on the JSE.

The shares have crept up, but are still – according to my calculations – trading below tangible net asset value. NAV aside, the earnings multiple on Rextru is well below its larger peers like Foschini, Mr Price and Truworths.

In other words, I don’t think Brimstone will be looking at a 1 000c/share offer for its Rextru shares or 800c/share for its Af&Over shares.

The thing is that there is so much potential tucked away in Rextru, more specifically Queenspark, that it seems quite possible that a larger fashion conglomerate or private equity firm could well be willing to fork out a premium.

One has to consider that Rextru, run for generations as a family-controlled business, has always erred on the side of caution.

Quite striking is the fact that at last count Rextru had over R100m in the bank and a chain of around 50 Queenspark stores.

Perhaps the real potential of the business could come to the fore with a chain of 100 Queenspark stores and only R50m in the bank?

source: – Fin24.com

Boxing promoter may buy ailing Bay Utd

UITENHAGE-BORN businessman, Butityi Konki, may be in the queue to purchase ailing Port Elizabeth-based First Division soccer side Bay United.

Konki, who is International Boxing Federation lightweight contender Ali Funeka’s business manager, said he would not have a problem being the club’s new owner after United owners, Izingwe Holdings’ decision to get rid of the club.

Izingwe Holdings threw in the towel after United’s failure to return to the Premier Soccer League (PSL) next season.

“Izingwe Holdings regrets to announce that Bay United Football Club will immediately cease conducting business while beginning an extensive process that may lead to the sale of the club,” a statement released by the club said.

“I’m going to speak to my legal advisers in Port Elizabeth about whether to get involved at Bay United or not. I could be interested in the club as many people have called asking me to buy it,” said Konki.

Apart from the club’s failure to return to the PSL, the owners say there were other issues that prompted them to give up on Umlilo.

These included the PSL’s imposition of a R1.3 million liability following the club’s retrenchment of players at the end of the 2008/9 season.

Their unsuccessful attempts to get financial and other forms of sponsorship assistance from the Nelson Mandela Bay Municipality, the Eastern Cape provincial government and commercial sponsors, also contributed to Izingwe Holdings’ decision. “We will engage with all the creditors of the club, including the players. No final decision will be taken until discussions have been held with all relevant parties.

“We undertake to do our best to resolve this matter in the best interests of all parties,” said club boss Sipho Pityana.

Pityana tried to sell United to Konki after they were relegated from the PSL at the end of last season, but the deal fell through.

Pityana informed Konki last year that he was selling United for R15m, but the Johannesburg-based businessman said he was prepared to part with only R5m. “There was no way that I could pay that kind of money for a team that had just been relegated from the PSL.

“I was only prepared to pay R5m but I got no response after writing to Pityana indicating my interest,” said Konki.


source: Daily Dispatch

All Miss PE finalists will be dressed to nines in ‘red carpet diva’ designs

A ONE-OF-A-KIND designer dress and a chance to model it is just one of the great prizes The Herald Spec- Savers Miss Port Elizabeth 2010 finalists can look forward to.

A group of talented local designers has been given the task of designing a dream dress for each of the finalists, to be worn at the gala.

Mum’s has sponsored the 10 designers with R10000 and they have been told to let their imaginations run wild to create the ultimate “red carpet diva” design. The look must be feminine and beautiful, with a subtle underlying sex appeal. No doubt all the finalists will look stunning in their beautiful creations. What makes these dresses a little different from the designer creations of Ralph Lauren or French Connection, is that they will be one-of-a-kind. Both the audience and the finalists are sure to be excited to see what these designers come up with for the big day.

The chosen designers include up-and-coming couturiers Natalie Creed, Megan Holden, Zuhdi Abdol, Ati Qina and Thabo Makhetha, who wowed audiences during the Weekend Post Fashion Challenge last year, and well- known local designers and regular La Femme bridal fair exhibitors Colinda Raath, Lee-Anne Griffiths, Leandra Fourie, Jason Kieck and Johan Wolmarans.

The designer dress prize goes with a host of others for the winner and runners-up, adding up to a total of R546000. The title winner alone will receive prizes worth more than R345029.

This includes an all-expenses- paid cruise on the MSC Sinfonia to Portuguese Island in the Bay of Maputo in southern Mozambique, courtesy of Uniglobe Bay Travel, and the use of a new 1,4 Polo Comfortline, including insurance for the year, from Market Square VW, Uitenhage.

Those interested in winning The Herald Spec-Savers Miss Port Elizabeth 2010 title can go to www.theherald.co.za for how to enter and call 041-5047300 to book a free photographic shoot.

Source: The Weekend Post