ASL to shore up Dawn stake

11,99 percent of Dawn on the open market for a cash consideration of US$3,7 million bringing its total shareholding in the firm to 28,54 percent.
Sources close to the deal said shareholders were seeking to control about 35 percent of the company to protect and enhance shareholder value.

“At this point, ASL can only buy into Dawn up to a maximum of 35 percent. Thereafter, they have to offer minorities.
“However, this would require some financial restructuring since their debt-to-equity ratios might start to be uncomfortable,” said a source.
The recent purchase gives ASL the much-needed controlling shareholding in Dawn.
Dawn had issued summons to ASL to cancel the 50-year leases for the eight properties being leased to ASL.

It cited breaches dating back to 2009, which ASL denies in its plea submission.
With this acquisition, ASL would, to a greater extent, influence future decisions on Dawn.
Whether or not Dawn declares a dividend, the value for ASL seems to lie only on the security of its leases.
Analysts said yesterday ASL seems to have hedged its bets by increasing its shareholding in Dawn and in the event that it loses the case to Dawn it would fight it at shareholder level.

It has been established that there are common shareholders in both Dawn and ASL, making the common shareholders in Dawn sit on at least 57 percent.
This dates back to the 2003 unbundling.
“The option Dawn has is to either sell out of Dawn or begin to buy into ASL,” said one analyst.

“If they sell, the buyers are likely to be those shareholders who are invested in ASL, meaning there is no upside to the share price since the value would now be perceived to be in ASL.”

Another analyst observed that if the other Dawn shareholders bought into ASL, then the two entities might be heading for a merger.
“When one analyses the ASL share register one easily establish that at least 75 percent of its shares are tightly held,” said the analyst.
A number of changes have also been taking place at the hotel group, with former chairman Mr Tim Chiganze being replaced by Mr Bhekithemba Nkomo.

After acquiring an additional 12 percent ASL is expected to make board appointments in Dawn.
Yesterday, ASL closed at US0,81c while Dawn finished the day at US0,8c.