Rights Issue

In June 2020 Curro Holdings announced a partially non-renounceable Rights Offer to raise up to R1 500 000 000 from its shareholders.

According to Andries Greyling, CEO of Curro Holdings, the rationale for the Rights Offer is to raise additional capital for potential opportunities that have presented themselves in the current market. Curro is currently assessing several potentially lucrative opportunities, says Greyling.In addition, Curro will use the Rights Offer to proactively reduce the gearing levels of the company due to uncertainty created by the Covid-19 pandemic, from a prudency perspective.

The Covid-19 pandemic presents a number of opportunities to Curro; we are ready to continue to build the company with the primary aim to ensure quality education for more learners in southern Africa, and in so doing, create value for those who walk the path with us, says Greyling.

In terms of the Rights Offer, 185 873 606 new Curro ordinary shares will be offered to shareholders recorded in Curros share register at the close of business on the record date of the Rights Offer at a subscription price of R8.07 per Rights Offer Share and in the ratio of 45.10532 Rights Offer Shares for every 100 Curro ordinary shares held.

The subscription price represents a discount of approximately 10% to the 30-day volume weighted average traded price of Curros ordinary shares on the JSE as at close of business on Monday, 8 June 2020.

PSG Financial Services Limited, which currently holds 55.4% of the issued share capital of Curro, has agreed to follow its rights in terms of the Rights Offer and accordingly subscribe for 102 948 406 Rights Offer Shares and partially underwrite a maximum of 39 554 692 Rights Offer shares that are not taken up by other shareholders in terms of the Rights Offer. This equates to approximately R1 150 000 000 in the aggregate.

QUESTION:

Impact of Right Issue:

Provide an opinion on the rights issue of 2020. How do you think this might add value to the shareholder in the long run?