So Abil has paid off all debts, still owns the insurance company Stangen which makes about R1.4 billion a year (granted, the latter will diminish as the book runs off), and has R250 mio cash reserves. Also, it will constitute a new board and resume trading shortly? So many ppl have said that the shares were completely worthless - what the hell did they base that on? Many people with major egg on their face.
The R250 mio is just the cash reserves in unconsolidated Abil. Then there's Stangen too, which had R1.1 billion book value at Sept 2015 - BUT it makes about R1.4 billion a year (which will reduce as book runs off) - obviously Abil used dividends from Stangen to pay off creditors (reducing Stangen's cash). So value in Stangen will be cash left plus continuing income (until book is totally run off). But, this kind of insurance is extremely profitable (very small % paid out in claims), so as policies lapse, big amounts will be released from actuarial reserves. Very difficult to forecast without latest Stangen financials, but I'm forecasting R2 billion very conservative minimum value. Can be much more.
the business rescue plan on their website says that shareholders will get less than 7c a share - this being the anticipated left over NAV, once control is handed back to the shareholders (after all the creditors are satisfied).
Did that not assumed a value at a point in time ie. as if they had disposed of all assets. If the business continues - they will presumably benefit from the insurance contracts that continue to run with Stangen generating around a billion a year. I believe that Abil Bank has unilaterally "cancelled" many of these policies. It remains to be seen how that plays out - through the courts probably!
the 7c a share was the liquidation value for a past date. No relevance as Abil continues as going concern and Stangen continues to generate income. New African Bank can only replace in-place insurance policies with new loan contracts, and I'm guessing they'd be loathe to do this in view of new affordability tests. Also, it would depend on amount of customers taking up the new offer - just the logistics alone is difficult. In any event, if policies lapse, Stangen can release all the actuarial reserves since they don't need to provide for potential payouts anymore.
Well apparently they have -presumably on the basis that all loan agreements are now backed by the new entity which is not bound by its past commitments to ABIL Investments. I'll try and find the article and post it for you. Not that these pseudo-journalists don't get it wrong half the time anyway. The insurance licence- which is very widely framed for ABIL - is a valuable asset and may make this one of the most interesting "new" listings in years... (if it comes to market at a few cents.) I bought this in the final crash on the basis that the sum of the parts was greater than the price. I didn't allow for the fact that the "government" would steal the company from the shareholders. The irony is that it was the BEE partners who gave us a lifeline in the end by stymying the STANGEN deal.
Sooo....Abil results out yesteday. NAV (cash) of R1.06. If it liquidates and preference shares have to be repaid, the NAV is 30.8c. But it's still receiving income from Stangen (they cut a deal with the new African Bank) and they might even decide to continue with Stangen in some new form once the runoff is done. So there's much more value for shareholders than just a few pennies (if they don't liquidate, prefs don't have to be repaid, except for normal dividends if these get declared). Any apologies from the people who have been wrong?