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GOLDEN ARROW FORMER UNIONISTS GO FOR BUS(T)

01 Apr Transport

WT seems the promise of cash flows from free-to- | air television station e-tv has prompted the former jL-trade unionist that run Hosken Consolidated Investments (HCI) to go for bus(t). Last month HCI – headed by Marcel Golding and Johnny Copelyn – made a R270m pitch for the Golden Arrow Bus Company. While Golden Arrow would be an anomaly in HCI`s high tech investment portfolio the fact that bus companies (especially Gauteng rival Putco) can spin wonderful cash flows has obviously not been lost on HCI. Golden Arrow`s history stretches back to 1861 when it traded as the Cape Town and Greenpoint Tramway Company. There were a number of mergers and acquisitions during the next century and a half, including a listing on the London Stock Exchange and a stint as Tramway Holdings in the infamous Tollgate Group. About 12 years ago (when Tollgate folded under its debt burden) Tramway Holdings (renamed to Golden Arrow Bus Services) was taken over by a consortium of investors led by the company`s management. The recent past has not been entirely free of controversy. There were allegations by the crime busters, the Scorpions, that Golden Arrow management had plundered a R35m transport subsidy. The group has also been targeted by taxi bodies, which sometimes resort to violent means to protect their perceived turf. Golden Arrow`s business scope is sprawling. It serves the entire metropolitan Cape Peninsula and Cape Flats area – including areas such as Bellville, Milnerton, Durbanville, Kuilsriver, Mitchells Plain, Blue Downs, Atlantis, Langa, Guguletu, Nyanga, Crossroads and Khayelitsha. 11 While no financial statistics are available readily to the public, the profit prospects of Golden Arrow is demonstrated by the fact that its carries 180 000 people a day on 900 routes. Aside/from the taxi industry the group has no direct competition. So far HCI have not spelt out their intentions for Golden Arrow – although trade union CQ`SATU has not wasted time in vehemently opposing the deal. Cape Business News understands that Golden Arrow has been keen for an empowerment partner for some time. .But whether other bidders were invited to participate is unclear. I One aspect of “owning a bus company that might have appealed to HCI is the lucrative transport subsidy provided by government an arrangement that obliges the bus company to increase its fares every year. This year Golden Arrow increased its fares by an average of 6.5 Perhaps an indication of how much profit Golden Arrow can generate from its fares is illustrated by the `dividends` paid to 50community-based partner, the Golden Arrow Foundation. Since 1994 dividends topping R25m have been paid to the foundation, which in turn supports community projects. It`s worth remembering HCI is a major shareholder in Mettle, the financial structuring specialists. Possibly Mettle has a working model that could eke out improved returns from Golden Arrow? All in all Golden Arrow sounds like the old economy wheel that HCI needs to oil the cash flow mechanisms on its riskier sections of its high tech investment portfolio. A Golden Arrow terminus: the HCI deal may also spell a turn-round for black control efforts.

Source: Cape Business News