JSE warns Blue Label that delayed results could lead to suspension
The JSE has warned Blue Label Telecoms that it needs to publish its financial results before the end of September 2019, or face possible suspension.
The bourse put out the notice on Tuesday morning (17 September) saying that Blue Label’s listing on the stock exchange’s trading system has marked the group as failing to submit its provisional financial report in time.
“If the above-mentioned company still fails to submit its provisional report on or before 30 September 2019, then its listing may be suspended,” the JSE said.
Blue Label announced at the end of August that it would be delaying its results as it assesses its valuation of Cell C. The group holds a 45% stake in the operator.
The group warned shareholders that it expects headline earnings for the year ended May 2019, to be down by at least 20% from the prior year, as it tries to quantify the impact of Cell C’s financial woes on its balance sheet.
Blue Label said that its audit for the year ended May 2019 is ‘substantially complete’. However, the group said it is currently in the process of determining the valuation of its investment in Cell C, “incorporating the effects of the transactions that are currently in progress”.
The company reaffirmed that it plans to publish its results on 26 September.
This is the same date that 15% shareholder in Cell C, Net 1, will also be publishing its financials after announcing a similar delay because of Cell C.
The warning from the JSE sent Blue Label’s share price to a new low of R2.87 per share, down 47% from the start of the year. The Blue Label share price has remained under pressure during 2019, as news of Cell C’s financial woes came to the fore.
Cell C’s financial woes
In an open letter published in early July, Cell C chief executive Douglas Craigie Stevenson said that the group is labouring under R8.9 billion ($639 million) of debt and trying to secure new funding from a consortium of investors.
The chief executive said that the company started a round of cost cuts, has frozen hiring and is reviewing its contracts, and has begun talks to delay debt payments and hired consultants to probe its business practices and advise on a restructuring.
Cell C paid R116 million in interest due to bondholders for June and a further R90 million on another funding arrangement with local banks, Craigie Stevenson said at the time. This led to further sharp declines in the share price of Blue Label on the JSE.
Cell C was also recently downgraded by ratings agency S&P Global, which announced that it had lowered its rating on Cell C to SD (selective default).
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