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New injection of capital cements Visual International’s recovery

22.11.2017 by Marketing Concepts

JSE AltX-listed property development company Visual International (Visual) has announced a R500 million funding agreement with New York-based alternative capital provider Milost Global Inc.

 

The deal signals that Visual is well on the way to recovery from the losses and cashflow constraints it faced just two years ago.

 

“The injection of funding will be directed towards financing Visual’s property development projects, acquisitions and working capital needs,” says Visual’s managing director Charles Robertson.

 

The agreement includes two instruments:

 

  • A R150 million equity draw-down facility for Visual shares, subscribed at a 50% premium to the five-day volume-weighted average share price; and
  • A R350 million convertible debt facility, or notes draw-down, that offers 5% interest annually per convertible note, paid in cash quarterly.

The funding from the first equity drawn down has now been received and will be used for Visual’s working capital. The issue price for the first draw down is 16.5 cents and is at a 50% premium to the five-day volume-weighted average price (VWAP), which was determined at 11 cents. The drawn down costs of R75 000 will be settled at the VWAP of 11 cents per share. The shares will be issued under the company’s general authority to issue shares for cash.

 

The announcement and first equity draw down come hot on the heels of Visual’s latest trading statement which confirms that while the company is expected to post losses per share for the current fiscal year, those losses are a 25.5% improvement on 2016 results.

 

The headline loss per share for the year ending 28 February 2017 is expected to be (3.54) cents per share, compared with the loss of (4.75) cents per share for the previous financial year.

 

“The Board of Directors has focused strongly on disposal of non-core assets, protecting the asset base and reducing gearing. This ‘back to basics’ approach is already showing positive results,” explains Robertson.

 

Visual has faced some significant challenges since listing on the JSE in May 2014.

 

The company was suspended from trading in July 2016 after provisional financials were not submitted within the JSE’s stipulated three-month period.

 

Commenting on the agreement, Lulu Letlape, the Co-founder & Co-Chairman of Milost Global Africa,  said  “The investment in Visual signifies Milost Global’s confidence in the South African property market. Despite the challenges faced by Visual in the past few years, Milost believes that the imminent recovery of the South African economy from a technical recession is a stimulus for positive growth for Visual and the property market.”

 

The Board moved swiftly to sell several non-core assets and land to settle outstanding payments to creditors, leaving it relatively debt-free by the end of 2016.

 

Robertson believes that it is of great benefit for Visual International to partner with Milost Global. Not only will this investment unlock many local business opportunities; but it will establish a strategic relationship with an important private equity fund in the heart of New York, which can open up further investment and other relationships. Such investment and other business relationships with the established investment fraternity of the world is what South Africa now needs; and the partnership between Milost Global and Visual International can play an important part in bringing this about.

 

“We look forward to a bright and successful year ahead, with new capital and steadily climbing share prices,” he concludes, adding that the company will focus on joint ventures, strategic sales and the development of its own property holdings.

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