Transaction Capital in talks to restructure SA Taxi

Media reports landing through to BusinessTech Africa indicate that Transaction Capital said it was currently in talks with taxi association Santaco on restructuring its SA Taxi unit.

The company announced the news on Thursday in a webinar and this comes after issuing a trading statement last week, saying it was going to restructure SA Taxi.

Media reports indicate that the firm also warned that its earnings would be reduced, thus leading the company’s shares to fall drastically, wiping billions off its market valuation.

IOL Business reports that in a trading update on Monday, the group, which controls the WeBuyCars used-vehicle operation, the SA Taxi vehicle-financing operation, and the international business outsourcing solutions group, Nutum, said that core earnings per share would be down 41%-46% in the six months to end March.

“The finance market or the credit market for taxis has contracted specifically on the lower end,” it said, adding that this had led to it making a few big decisions.

The firm has previously said it was confident that the group’s swift response in rebasing this business would give it the operational, financial, and strategic flexibility to recover and grow.

“It has implications for potential growth drivers. And obviously, it has implications for the cost base and how we make that efficient,” it added.

“Of course, nobody had anticipated that Covid would be a thing back then (2018). Many other macro challenges that have followed meant that the funding transaction that allowed the industry to purchase the shares is underwater.”

In the statement released on Thursday, the company said it planned to recalibrate the taxi business and loan originations.

In a previous transaction, Transaction Capital said it was in talks with Santaco, which was concluded in 2018.

Santaco owns 25% of SA Taxi, and SA Taxi contributed 70% of group revenue four years ago.

“So we are currently in discussions with the funders of that transaction, as well as Santaco to work out a restructuring of those arrangements because clearly, the existing structure will not work any longer. We did not have the outcome of that discussion. Those are live discussions,” the group said.