This week Trematon - Cape west coast leisure property Club Mykonos Langebaan (CML) is its anchor asset - detailed plans to issue 40-million new shares at 300c each to investment institutions, specialist investment entities and individuals.
A market source noted that the shares-for-cash issue - which represents almost 20% of Trematon's market capitalisation - was a departure for the firm, which had funded investments from internal resources or borrowings.
The source speculated that increased economic activity at the Saldanha Bay Industrial Development Zone (IDZ) was a catalyst for the fund raising. "Perhaps developments at the IDZ have thrown up some interesting development opportunities that might materialise in the next 12-18 months."
Trematon executive director Alan Groll said yesterday risk considerations prompted the decision to raise fresh capital. "We cannot continue to leverage up to take advantage of new opportunities. At the moment our potential deal flows look strong - especially in the property sector - and having equity will allow us to move quicker on new opportunities."
Trematon's Stock Exchange News Service announcement noted the amount of cash to be raised will be "more than sufficient" to fund the company's existing investment pipeline over the next 12-18 months without taking on excessive levels of debt.
It seems CML will also benefit. Mr Groll confirmed the first residential development for eight years was under way at Club Mykonos. "Sales have been more than satisfactory, and having raised new capital considerably derisks the construction of such a large development."
Institutional shareholders subscribing for new Trematon shares include Sanlam Investment Management, Investec Asset Management and Investec Wealth and Investment - which collectively accounted for half the new share issue. More intriguing is the subscription by Redefine International CEO Mike Watters and Westbrook Capital Management.
The shares were issued at a slight discount to Trematon's last stated intrinsic net asset value of 315c per share and a more substantial 14% discount to the last traded share price of 350c.
Source: Business Day
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