LONDON – Richemont shareholders eager to get their hands on a set of warrants linked to a loyalty scheme announced in July will have to hold off for a while.
Ahead of its behind-closed-doors annual general meeting on Wednesday, Richemont said it was temporarily postponing the issue of warrants due to a wrinkle in how they might be distributed in South Africa, where its chairman and principal shareholder Johann Rupert is from, and where the company is listed on the Johannesburg Stock Exchange.
On Wednesday, Richemont said it is studying the possibility of delivering Richemont A shares to holders of South African depository receipts, which would automatically cancel the company’s depository receipt program in South Africa.
Richemont, parent of brands including Cartier, Van Cleef & Arpels, IWC and Dunhill, said it is looking to come up with a new, more simplified structure that would reduce administrative complexity and facilitate cross-border trading in Richemont A shares between investors on the SIX Swiss Exchange and on the Johannesburg market.
As a result, Richemont said the board will no longer propose the creation of the loyalty warrants at Wednesday’s meeting in Geneva, and will instead submit a revised proposal on the matter at an extraordinary general meeting of shareholders, due to be held later this year.
As reported in July, Richemont planned to issue warrants to shareholders, allowing them either to trade the security, or to acquire Richemont A shares in three years at a potentially beneficial exercise price.
The warrants were part of a promise that Rupert had made to shareholders in May to thank them for sticking with the company during the COVID-19 crisis, and beyond.
The warrants were also meant to be a means of keeping shareholders content after Richemont said it was downsizing its dividend for fiscal 2019-20 to 1 Swiss franc per 1A share/10B shares.
At the time, the company said it wanted to allow shareholders who hold the warrants until maturity “to benefit from any potential upside in the market price of the Richemont A shares” during the lifetime of the warrants.
“The unprecedented effects of the COVID-19 pandemic and the uncertainty surrounding broader economic conditions, the board of directors has decided that it is appropriate to retain an extra liquidity buffer with a reduced dividend level, while awarding shareholders a supplementary benefit that will allow them to capture any ultimate improvement in global conditions,” Rupert said in July.