Eqstra Won’t Raise Bid for Protech on Construction Woes

Eqstra Holdings Ltd., a South African mining equipment-leasing company, said it won’t raise its bid to acquire Protech Khuthele Holdings Ltd. partly because of weakness in the construction industry.

“We believe that 60 cents is a fair and reasonable price that will unlock value for shareholders,” Johannesburg-based Eqstra’s Chief Financial Officer Jannie Serfontein said in a phone interview today. “We are not going to pay for prospects which are on paper. The construction market is very difficult at the moment.”

The company already owns 32.77 percent of Protech, and is offering to pay 146 million rand ($16 million) for the shares it does not already own. That would value the company at 218 million rand, Eqstra said in a statement on Feb. 22.

Protech, which has interests in civil engineering and mining, said on April 5 the offer “significantly undervalues the company and is unfair and unreasonable.” Its shares fell as much as 5.7 percent, the most in more than a month, and were down 3.8 percent at 51 rand by the close in Johannesburg.

Protech shareholders should now be left to decide on whether to accept the offer, Serfontein said. Eqstra shares traded 0.3 percent lower at 6.40 rand, valuing the company at 2.7 billion rand.

Reduce Liquidity

Eqstra raised 446 million rand by selling fixed and floating rate bonds with a price of 252 basis points above three-month Jibar, near the top of its guidance, the company said in an e-mailed statement today. The funds will be used to pay down commercial paper and bank debt, reduce liquidity and refinance risk.

“It is more than enough for the time being,” Serfontein said. The company will not return to capital markets until August or September “depending on the needs,” he said.

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