SOUTH AFRICA – Grand Parade Investments (GPI), a South African restaurant and gaming group has entered into agreement with Spur Corporation to sell its 10% stake, back to the steakhouse company reducing its shareholding from 17.5 percent.
GPI had acquired 10.8 million shares, equivalent to 10% stake from Spur in 2014 for US$20.92 million (R294.7m) in a deal that included a five-year “lock-in period” to end October 2019.
According to the agreement Spur will repurchase the 10.85 million ordinary shares for R24 a share amounting to a total of US$18.49 million (R260.4m).
The repurchase comes after the two companies announced three months ago that they were in talks “that may result in significant implications for both companies”.
In addition, Spur is separately seeking approval to repurchase 6.64 million Spur shares, held in the Treasury.
This represents 6.12% of the total issued share capital at a market value of R21.91 per share, for a total consideration of US$10.32m (R145.39m).
The group is set to hold a general meeting for its shareholders on September 25 for the purpose of considering the special and ordinary resolutions pertaining to the GPI and Treasury repurchases.
“Spur has a sizeable cash balance with no immediate material investment opportunity that meets the investment criteria of its board.’’
“It is envisaged that the utilization of its cash resources to implement the GPI repurchase will be beneficial to existing shareholders of the company, as it will enhance the company’s earnings, return on equity and future dividends,” it stated.
GPI has been gradually reducing its shareholding in Spur. In May last year it cut its stake from 18.5 percent to 17.5 percent as it shifts focus to its global hamburger franchise, Burger King SA.
Grand Parade Investments (GPI) said the decision was made possible by the group’s strong performance allowing it to satisfy their contractual commitment in terms of the Burger King Master Franchise Development Agreement.
The agreement encompasses a series of commitments intended to strengthen the Burger King brand in important markets as well as investing and developing leading brands in the quick service restaurant industry.
This has led the rapid roll out of roughly 69 stores and the positive buy-in from the South African public. This high-speed growth of the business has increased its role as a competitor to Spur.