Profurn buys back its book on easy terms
The deal, worth about R270-million, will result in FNB being Profurn's largest shareholder, with 22% of its equity.
FNB last year sold back McCarthy Retail's book, which reduced the critical mass of FNB's furniture bank, FirstPref.
Profurn chairman Gerald Rubenstein says: "We have struck a good bargain for ourselves."
The purchase price is at a 36% discount of the value of Profurn's debtors' book. This book is now 50% bigger than it was when Profurn sold it to FNB 15 months ago for R190-million.
The purchase price will be settled by R100-million in cash, funded by a loan from FNB at a preferred rate, and the issue of approximately 140-million Profurn shares at 120c a share which FNB must hold for seven-and-a-half years.
If during this period a buyer is found for these shares at a price of 263c a share - more than double the current share price of 126c - the purchase price of the deal will be reduced by a further R100-million. If this happens the purchase price becomes R170-million - a 60% discount on the gross value of Profurn's debtors' book.
"The benefits from the preferred interest and the profits from the book more than offset the dilutionary effect from the issuing of new shares," says Profurn financial director Gavin Walker.
The deal boosts Profurn's net asset value a share by 50% from 37.8c to 56.7c a share.