PUTCO – Is HCI still watching the wheels? HIGH yielding bus company Putco, desperately keen to clinch an empowerment deal has produced another ticket for its minority shareholders to ride off into the sunset. But is it enough to grease the wheels of stubborn shareholders or – perhaps more succinctly – sufficient to keep other contenders’ hands off Putco s dividend-revving engines? This time the ticket – issued by controlling shareholder Carleo Enterprises – is stamped with a price of 850c, representing a considerable premium on the group’s share price on October 20 (the day before a cautionary notice was published). The new buyout price is also a hefty premium on the black empowerment induced offer last year to minorities of 550c/share (for a complete exit) and the option of unlisted shares and a cash consideration of 547c/share. The new buyout offer also trumps the opportunistic empowerment offer from Hosken Consolidated Investments (HCI), which late last year pitched an effective 674c/share (ex of Putco’s 3Oc/share dividend) buyout offer. As we said before, Putco – or at least the Carleo family – is desperately keen to make an empowerment deal (though clearly HCI was not the preferred party!). Last year DEC Investment Holdings and Safika were identified as empowerment bidders for Putco. Though most investors who clung to their Putco scrip should be happy with the increased buyout offer, there are some murmurings of dissatisfaction among minorities. Some clearly feel that Putco is a great vehicle (especially in terms of yields) for the years ahead and that Carleo Enterprises will reap the vast benefits of the mooted empowerment link-up(s). And with Putco out of the public eye, the terms of the long awaited empowerment deal – so far undisclosed – could benefit Carleo Enterprises. Putco has addressed some of the market suspicions. “It’s not contemplated that the subsequent empowerment transaction would result in more favourable conditions being offered for Carleo’s shareholding, which are not being extended to the scheme participants.” What will be interesting to gauge is whether HCI, which last year acquired the Cape Town-based Golden Arrow Bus Service, will revisit Putco, possibly in the form of an offer that beats the new offer and is attractive enough for Carleo Enterprises to get off the bus. The new look HCI certainly has the resources and wherewithal to put together a viable bid for Putco, which is valued at less than R250m based on the Carleo offer.

Source: Finance Week – Marc Hasenfuss