The former VenFin has chosen to convert into shares the $100 million convertible bond it holds in Dimension Data (DiData).
The bonds are held by R&V Technology, a subsidiary of Business Ventures Investments 951 (Newco). Newco was formed to acquire all the assets of VenFin, except a stake in Vodacom, when VenFin was acquired by UK cellular company Vodafone.
Newco already owns a 7% direct stake in DiData, which it acquired in the open market.
While DiData spokesmen could not immediately be reached for comment, an official statement says the bond will be converted into about 188.12 million ordinary DiData shares.
"In terms of the agreements governing the convertible bonds, Dimension Data had the right to redeem the bonds under certain share price conditions," it says. "Given Dimension Data`s share price performance, these conditions had been met, and R&V has elected to convert the bonds rather than accept redemption."
An analyst says although the convertible bond amounts to a further 12.2% stake in DiData, these new shares will dilute the total effective shareholding, which will amount to about 18%.
The analyst says he believes the conversion will be earnings and value dilutive for DiData in the long term.
The seven-year convertible bond was issued in late 2002. At the time, DiData argued that it needed the $100 million to build up a war chest in the event of a sustained downturn in the market.
The DiData share was trading at 588c by mid-afternoon, down 2c on yesterday`s close.
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