Roland Berger examines renewal of Exchange in Gabon

02 September 2015 Consultancy.uk

Gabon, in Central Africa, is seeking to re-develop its stock exchange – the BVMAC* – such that it enables the local companies and institutions of six small African nations to issue bonds and stocks. For the redevelopment of the exchange, the Financial Market Supervision Commission of Central Africa has hired Roland Berger to perform a feasibility study.

The BVMAC was set up in 2003 in Libreville, Gabon, to allow six countries, with each minor financial clout but populated by more than 40 million people, access to a financial market. The institution aims at providing governments and companies in the CEMAC** area with financial facilities as well as creating a system of transparency for users.

Although the exchange opened in 2003, competition with Cameroon’s DSX Douala Stock Exchange resulted in a slow start and the institution only became fully operational in 2008, after its back-office and trading platform functionality became viable. Since then, while the bond market has been relatively active, the stock market has so far managed to attract only one company SIAT, the Gabonese agro-food group.

COSUMAF hires Roland Berger

At the time of SIAT’s listing, in 2013, it was hoped that the company would help propel the exchange into wider use within the area. According to Pascal Houangni Ambouroue, Head of the BVMAC in 2013, issues have for the majority been with banks and financial institutions, rather than active traders. The equity issue it was hoped would “liven up trading.” However, this has not eventuated.

Restarting the exchange
In a bid to re-enliven the exchange, the Financial Market Supervision Commission of Central Africa (COSUMAF) has decided – with financial support from the World Bank – to seek a way forward. The COSUMAF hired consultancy Roland Berger to conduct a study on the potential of the financial market of this region. The firm will, as part of the project, meet with various authorities including ministerial, business organisations, chambers of commerce, companies from the state portfolio, private companies and financial companies. The aim of the study is to make the exchange functional and competitive with its neighbour.

The consulting firm will deliver its findings to the COSUMAF who will make a decision on how to revitalise the region and the feasibility of the exchange.

* Bourse des Valeurs Mobilières d'Afrique Centrale.

** Economic and Monetary Community of Central Africa.

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Debenhams administrator handed legal threat from Sports Direct

24 April 2019 Consultancy.uk

Earlier in April 2019, the long-suffering high street entity of Debenhams finally collapsed into a pre-pack administration, wiping out equity for shareholders including Sports Direct. Now, Mike Ashley, the controversial owner of Sports Direct, has threatened legal action to remove FTI Consulting from its role as Debenhams’ administrators, following the obliteration of his stock in the company.

As the retail sector in the UK continues to endure a torrid period, British retail stalwart Debenhams endured a spectacular fall from grace. The high street ever-present was founded in the early 19th century, with a single store in London, before expanding to 178 locations across the UK, Ireland and Denmark. However, following a string of profit warnings and several rounds of lay-offs, the company engaged advisors from Big Four firm KPMG to consider its options in the Autumn of 2018.

At the time, Debenhams Chairman Sir Ian Cheshire insisted that the chain was not heading for insolvency, or that it was actively embarking on a company voluntary agreement (CVA). Nevertheless, Debenhams fell into administration in Spring 2019. The news saw Chad Griffin, Simon Kirkhope and Andrew Johnson of FTI Consulting appointed as joint administrators, immediately selling the retailer to a newly incorporated company controlled by secured lenders.

Debenhams administrator handed legal threat from Sports Direct

The pre-pack administration deal meant Debenhams was able to access significant additional funding, preserving 165 of its stores, though plans to close around 50 under-performing stores in the next three to five years remain in place. At the same time, the deal maintained its commercial relationships with suppliers, employees and pension holders. However, it also effectively led all of Debenhams’ previous shareholders – including the retail magnate Mike Ashley – to lose their equity.

Ashley’s Sports Direct firm had increased its stake in the department store chain in 2018, but stopped just short of the 30% stake which would require it to put in a formal offer to fully acquire the business. The transaction fuelled speculation that Ashley was waiting for the opportune time to acquire Debenhams, particularly in the wake of his swoop for House of Fraser. Ashley’s deal there enabled Sports Direct to buy the firm out of administration in a pre-pack deal, allowing the new ownership to controversially wash its hands of the company’s pension scheme in the process.

While some believed this was Ashley’s intent for Debenhams, FTI’s decision to sell the store to its creditors has instead resulted in a sizeable loss for Ashley. The hit of around £150 million from his loss in Debenhams comes after an analysis by The Sunday Telegraph suggested the tycoon had accrued “a sprawling web of stakes” in rival companies, and that he may be nursing losses of more than £500 million.

Bad press

Ashley – who recently lost a complaint ruling by British press regulator Ipso allowing the Times to note that he shared many characteristics with North Korean dictator Kim Jong-un – has been outspoken in his contempt for FTI since the news broke of Debenhams’ sale. The Sports Direct CEO has called for the resignation of FTI from its role as administrator, after his stake in the department store chain was wiped out. The Guardian stated that a letter to FTI saw Sports Direct’s lawyers even threaten legal action to remove the advisory firm as administrators because of a conflict of interests.

According to the reports, the document claimed, “[Sports Direct] will do everything available to it to unwind the damage caused to the company and other stakeholders (including large and small shareholders) by the events of today including but not limited to challenging the appointment [of FTI as administrators] and all consequences of it.”

The letter allegedly claims that FTI had been involved with Debenhams since the second week of February, and had engaged with the group’s lenders. The legal team reportedly suggested that this would consistute a conflict of interest, because FTI sold the retailer’s operating companies to the same lenders via a pre-pack administration.

This comes weeks after Sports Direct was itself accused of becoming overly cosy with a professional services firm, which has seen its auditor Grant Thornton placed under scrutiny for its continued role with the firm. In 2018, it was reported that Grant Thornton was set to stand aside from the role due to competition rules. It had held the role since before Sports Direct floated on the London Stock Exchange in 2007, while Phil Westerman, the Partner at Grant Thornton responsible for signing off Sports Direct's accounts, had himself undertaken the work for five years. 

Neither situation is understood to have changed, leading to the questioning of the independence of Grant Thornton’s auditing work with Sports Direct. Such is the level of bad press surrounding the retailer, that the Big Four of the accounting and advisory world – wary of incurring a new scandal of their own – are said to have ruled out taking the contract over.