Araxi shareholder sells 40 million shares to clear debt, cuts stake to 2.7%

Araxi Limited, formerly Capital Appreciation Limited, has disclosed that its empowerment partner, The Capital Appreciation Empowerment Trust (CAET), has sold 40 million shares in a block trade to settle its outstanding debt obligations in full.

The transaction, executed at R1.85 ($0.11) per share, will allow CAET to repay borrowings originally taken to fund its participation in the company’s 2015 listing, marking a significant shift in its financial position.

CAET’s restructuring and impact on Araxi
CAET, through its wholly owned unit CAET Holdings Proprietary Limited, initially borrowed R50 million ($3.04 million) to acquire shares in the group at listing, with funding first provided by Absa Bank and later refinanced by Investec.

As part of the financing arrangement, CAET pledged its Araxi shares as security, while dividends received over the years were used primarily to service interest payments. This structure limited the trust’s ability to deliver benefits to its beneficiaries.

Following the disposal, CAET will retain 35 million Araxi shares, now unencumbered by debt, enabling it to redirect both income and capital toward its empowerment mandate. The sale reduces CAET’s beneficial ownership in Araxi to 2.71% of issued shares, according to the company, which has filed the required regulatory notice with South Africa’s Takeover Regulation Panel.

Treasury share treatment and capital structure
Although Araxi holds no economic or voting interest in CAET’s shares, accounting rules required the group to consolidate the trust, classifying its holdings as treasury shares. As a result, the transaction has been treated as a disposal of treasury shares and was carried out in line with the Johannesburg Stock Exchange’s listing requirements. Following the transaction, Araxi’s issued share capital remains unchanged at 1.29 billion ordinary shares, with about 92.1 million shares classified as treasury stock, including the 35 million still held by CAET.

Additionally, Araxi has further disclosed that several of its directors and executives of major subsidiaries have sold shares in the company in a series of transactions aimed at settling cumulative tax obligations. The deals, also executed at R1.85 ($0.11) per share, involved both on-market and off-market sales, with total proceeds exceeding R14 million ($852,323), according to regulatory filings. 

What’s next for Araxi?
Executive Chairman Michael Reuven Pimstein led the transactions, disposing of 5 million shares. Executive Director Michael Brian Shapiro sold 346,537 shares, while Benjamin Powell, Managing Director of Dashpay, sold 867,322 shares. Steyn Nel Basson, an executive director at Synthesis Software Technologies, sold 784,838 shares, while Donn Engelbrecht, Managing Director of African Resonance Business Solutions, carried out a series of on-market transactions between June 24 and June 26, selling a combined 738,000 shares. Araxi said all director dealings totalling 7.74 million shares were conducted with the necessary clearances and involved direct beneficial interests. 

The debt-free position of CAET marks a turning point in its role within Araxi’s structure, potentially enhancing its ability to deliver long-term value to beneficiaries. For Araxi, the move simplifies an overhang linked to the trust’s financing structure, while maintaining its existing capital base as it continues to operate in South Africa’s financial technology and payments sector.