Company news in brief
01 June 2020 | Business
A raft of South African tobacco companies, activists and associations are seeking legal action over the ban on cigarette sales during the country's coronavirus lockdown.
British American Tobacco South Africa (BATSA) said on Friday it was commencing urgent legal proceedings to challenge the government's decision to extend the ban on tobacco sales.
BATSA, which sells brands such as Dunhill and Lucky Strike, has said the ban could boost illicit trade in tobacco as smokers were more likely to buy from underground traders.
The ban was "robbing the government of much needed excise tax contributions ... and threatening thousands of jobs," the company said in a statement.
BATSA is the leading tobacco manufacturer in South Africa with 78% market share of the legal cigarette market.
Japan Tobacco International, another multinational in South Africa, groups of farmers, retailers and consumers are also part of the legal challenge, BATSA said. – Nampa/Reuters
Tsogo Sun Hotels core profit hit
South Africa's Tsogo Sun Hotels Ltd on Friday reported a 9% fall in annual core earnings and did not declare a final dividend, due to a sharp drop in local and international travel amid the coronavirus pandemic.
Tsogo Sun said earnings before interest, income tax, depreciation, amortisation, rent, long term incentives and exceptional items (EBITDAR) for the year ended March 31 fell to R1.4 billion, from R1.5 billion a year earlier.
One of South Africa's biggest hotel groups, with brands such as Southern Sun and Garden Court, said it was planning for a phased reopening with certain hotels to resume operations as soon as they are allowed with increased safety measures.
The company said last week it expected annual core earnings to fall up to 10%.
The pandemic had a marked impact on fourth-quarter trading with international demand falling as early as the last week of February, the company said in its first set of annual results after its unbundling from Tsogo Sun Gaming Ltd. – Nampa/Reuters
Eskom: debt-to-equity swap proposed
South African state asset manager the Public Investment Corporation (PIC) has proposed converting its Eskom bonds into equity to help the ailing power utility emerge from financial crisis, the PIC's board chairman told Reuters.
Reuel Khoza said in an interview the PIC had made the proposal to the government several weeks ago after discussing it with its largest client, the Government Employees Pension Fund (GEPF), on whose behalf it holds most of its R90 billion of Eskom bonds.
He described the idea as still "at the conceptual stage" and stressed it would feature a number of conditions, including that Eskom improves its operational performance and governance.
It is unclear whether the GEPF would sanction a debt-to-equity transaction.
The PIC is one of the largest asset managers in Africa, with investments worth more than R2 trillion, including equity stakes in major companies listed on the Johannesburg Stock Exchange (JSE) and debt issued by state companies. – Nampa/Reuters
SAA administrators seek more time
Administrators at South African Airways have asked for more time to publish a business rescue plan for the struggling state-owned airline so they can discuss new government restructuring proposals, a letter to creditors showed.
The administrators, who were meant to publish their plan on Friday, have asked for a new deadline of June 8 so they can consult with creditors, employees and the government.
If the delay in publication is approved, they will start those talks on June 1, they said in the letter, dated May 28.
SAA has been fighting for its survival since entering business rescue - a local form of bankruptcy protection – in December, when the administrators took charge of the company after almost a decade of financial losses.
In late March, SAA suspended all commercial passenger flights as the government imposed one of Africa's strictest coronavirus lockdowns. – Nampa/Reuters
Volkswagen invests billions in China
Volkswagen said on Friday it will invest around 2 billion euro in two Chinese companies in the electric vehicle sector, calling it "the world's biggest market".
The German car giant said it will take a 50% stake in JAG - the parent company of state-owned JAC Motors - and increase its holding in the JAC Volkswagen joint venture from 50% to 75% for around 1 billion euro.
The group said in a statement that "by gaining management control, Volkswagen is paving the way for more electric models and infrastructure".
It will also buy a 26% share of Chinese battery supplier Gotion High-Tech for 1.1 billion euro.
China, which accounts for 40% of Volkswagen's sales, has become the world's largest auto market in recent years, with Beijing repeatedly pledging to support the electric vehicle industry. – Nampa/AFP.