The stock price collapsed – with overwhelming evidence that insiders were active.
When the JSE share price of an otherwise unexceptional company, Labat Africa, suddenly and mysteriously soared by more than 1,000% – after bumping along around 10c per share (cps) for years – Noseweek smelled something fishy. By 12 June last year the stock price had gone up to 123 cps and possible reasons were discussed in nose190.
There was, of course, something cooking – which insiders knew about. Also on 12 June, Labat announced the acquisition of the Reinhardt Transport Group (RTG). Labat had been issuing cautionary notices for about a year, indicating that it was in talks that could affect its stock price.
Investors were told that Reinhardt Transport was to be paid for by contributing R230 million in vendor finance (debt); RTG would in turn be paid R330m cash, raised by way of Labat’s issuing a raft of new shares.