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Transaction Capital Unveils WeBuyCars Unbundling: Unlocking Value for Shareholders

  • Transaction Capital Limited's decision to unbundle WeBuyCars aims at unlocking value for shareholders.
  • The unbundling process involves strategic shifts, share issues, tax considerations, and implementation details.
  • Shareholders must understand tax implications, apportionment ratios, and actions required for receiving WBC shares.

In the realm of corporate finance, strategic manoeuvres often aim to unlock hidden value within companies. Transaction Capital Limited, a prominent entity in the South African financial landscape, recently made waves with its decision to unbundle WeBuyCars, a move that holds significant implications for shareholders and the market at large.

Introduction to the Unbundling

Transaction Capital’s decision to unbundle WeBuyCars, as outlined in its recent announcements and circulars, signifies a strategic shift aimed at unlocking value for its shareholders. The process involves separating WeBuyCars from Transaction Capital and listing it as a standalone entity on the JSE’s Main Board.

Key Details of the Unbundling

The unbundling process encompasses several key elements, including a firm intention to unbundle WeBuyCars, a separate listing on the JSE, share issues, private placements, and pre-listing capital raises. Shareholders received detailed information regarding the unbundling, including apportionment ratios and cash payments for fractional entitlements.

Tax Considerations and Apportionment Principles

For South African income tax purposes, the unbundling is treated as an unbundling transaction under section 46 of the Income Tax Act. The apportionment of tax costs hinges on whether shares are held as trading stock or on capital account, with specific ratios applied to allocate base costs to Transaction Capital and WeBuyCars shares.

CompanyClosing Share Price on LDT+1 (R)Distribution RatioUnbundling Value (R)Apportionment Ratio (%)
Transaction Capital3.613.6100035.1293335.13
WeBuyCars20.400.326786.6663164.87

Implementation and Shareholder Actions

Under the unbundling, shareholders will receive WeBuyCars shares in Dematerialised form only. Certificated shareholders must appoint a CSDP to receive their WBC shares. Fractional entitlements will be rounded down to the nearest whole number, with cash payments issued accordingly.

Conclusion

Transaction Capital’s unbundling of WeBuyCars represents a strategic move aimed at unlocking value for shareholders. Through meticulous apportionment principles and clear communication, the company ensures transparency and compliance with tax regulations. As shareholders navigate the transition, they are encouraged to seek professional advice to optimize their financial outcomes.

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