The JSE is engaging the sponsors of Christo Wiese’s Titan Group in establishing the facts behind the reported placement of 17-million Shoprite shares with institutional investors, JSE GM Andre Visser said on Wednesday.

The transaction is thought to have been triggered by Shoprite’s closed period, which begins next Monday and extends to mid-August when Shoprite’s year-end results are released.

Retail analyst Syd Vianello said that in terms of JSE regulations, directors are not allowed to trade shares during closed periods. “If Wiese believes he needs money over the next few months then this transaction had to be done before close of trade on Friday,” Vianello said.

According to a Bloomberg news report, the shares, which were used as collateral for a loan to Wiese, were placed with the institutional investors at R210 a share.

Complex transaction

A spokesperson for Titan told Business Day that Wiese was not available on Wednesday to shed light on the complex transaction or reveal the size of the loan for which the shares were used as collateral.

“The value of 17 million shares at R210 is R3.6bn, but the banks may have lent Wiese less than this,” said one analyst, who did not want to be named.

He said that given the collapse in the value of Steinhoff shares, which Wiese used previously for collateral, it was inevitable the banks wanted to be well covered this time.

“Until we see the accompanying [JSE Sens] statement, it is impossible to say what was involved, but it is likely that the banks involved have short sold 17-million shares and a so-called collar was used to provide them with additional security,” the analyst said.

News of the transaction saw Shoprite’s share price fall 5.7% to a six-month low of R211.98.

Sasfin Securities’ Alec Abraham said the price was likely to be susceptible for a short while because of perceptions related to the transaction. “But whether Wiese or someone else owns the shares doesn’t detract from the quality of the company.”

On Wednesday, when asked why a Sens statement had not been issued, Shoprite referred all requests for information to Titan. It is possible Shoprite has not yet been informed of a transaction. Visser said the JSE listings requirements state that directors had an obligation to inform the company of any transaction relating to its securities by no later than three days after the dealing.

The company then had to publish a Sens statement within 24 hours of receipt of the information. This means a maximum of four days are allowed for the details to be on Sens.

Ahead of this week’s transaction, Titan owned 79 million Shoprite shares, or about 14%. In December Titan was forced to sell 19.2 million Shoprite shares. The average price in December was R206.55. (BusinessDay SA)