Oryx wants distributions cancelled

Jo-Maré Duddy – Locally-listed Oryx Properties will have an extraordinary general meeting of debenture holders later this month to seek, among others, that the interim and final distributions for 2020 be cancelled and that a moratorium be placed on distributions on the 2021 financial year.

In an announcement yesterday on the Namibian Stock Exchange (NSX), Oryx explained the adverse impact of Namibia’s ongoing recession and the Covid-19 pandemic on its operations.

The company said it has historically been paying out 100% of distributable income and on occasions payment of realised capital reserves.

“This has not allowed the business to build up reserves as seen by many other businesses,” Oryx said.

“The decision of the board to only pay-out 90% of distributable income in the 2019 financial year has not been in place long enough to have a significant impact on cashflows,” the group added.

To date, Oryx has not benefitted from relief measures introduced by the Bank of Namibia (BoN) for debt payment holidays for businesses for 6 to 24 months through the banking system.

“Relief from Oryx’s financiers has not been forthcoming or even when made available, attached certain restrictions to not pay any distribution payments,” the group said.

Retail

Oryx said the retail industry in Namibia has been “significantly impacted with no indications when business will return to a new ‘normal’”.

“Specifically, a number of these retailers that have managed to re-open are facing significant challenges with bringing stock into the country as our regional partners are in more restricted lock down phases than when compared to Namibia,” the group added.

Oryx’s collected 50% less rent in April and May compared to previous months. The group expects this trend to continue as the economy recovers.

“This creates uncertainty on whether this will become the new norm for collections for the foreseeable future,” Oryx said.

The company’s management is being “inundated” with requests for rental relief and rebates from many of its tenants across many industries. This will “significantly” impact cashflows, Oryx said.

For April alone, Oryx approved rental reductions totalling N$9.3 million.

Vacancy rates within the market continue to remain under pressure, with the liquidation of its Steeledale tenant post the company’s half year, Oryx continued.

“The recent news in the media regarding Edcon being placed under business rescue exerts further pressure on vacancies. This coupled with sourcing of new tenancies result in a trade in being considered between rent relief or a vacancy which might take months to fill,” the group said.

Other sectors

Oryx said the tourism sector has been significantly impacted by Covid-19. Indications are that borders are only to reopen in the latter part of the year, with global travel not anticipated to return to previous norms in the next 12 to 18 months.

“Some of our largest paying and longest serving tenants in this sector has been severely impacted and will require several months to recover,” Oryx said.

Although the residential sector remained stable, it is expected to worsen in coming months as a result of various job losses in the market due to Covid-19, according to the group.

The office sector was already under strain prior to Covid-19, “where some businesses are changing business models to allow more remote working and therefore require less space”, Oryx said.

Meeting

The extraordinary general meeting for debenture holders is scheduled for 29 June.

Should the resolutions be passed, the company will be able to build up reserves, meet current debt obligations, as well as invest into yield enhancing capital projects in a time where liquidity is constrained in the market, Oryx said.

“Most importantly,” Oryx said, it “will ensure that the company will continue to operate in a market which has seen so many others not being able to see through the storm”.

Passing the resolutions will also remove the need for a possible rights issue to debenture holders in “these unprecedented times and allow for long-term decision making”.

Oryx is listed on the Local Index of the NSX. It is the fourth biggest company on the index in terms of market capitalisation by free float.

Oryx closed Tuesday at N$17.49 per share. The group’s total of market capitalisation by free float was N$1.528 billion.