News in South Africa 12th May:
1. Brent crude oil climbs:
Saudi Arabia said Monday it had asked oil giant Aramco to cut its output by an additional one million barrels per day from June, to support prices that have crashed during the coronavirus crisis.
The move will reduce the production of the world’s biggest crude exporter to 7.5 million bpd, the energy ministry said in a statement cited by the official Saudi Press Agency.
Neighbouring Kuwait’s Oil Minister Khaled al-Fadhel said separately that his country would cut an additional 80 000 bpd to support the Saudi initiative.
The ministry said that with the latest production curb, the kingdom would have cut 4.8 million bpd from the record output levels in April.
The price of the international benchmark Brent crude is hovering around $30 a barrel.
2. Group Five to delist from JSE:
Group Five Ltd said on Monday the Johannesburg Stock Exchange has approved the South African builder’s application to delist its shares from trading, following a bankruptcy protection filing last year.
The company’s listing will be removed from the exchange on June 15, it said in a statement.
The construction company, which traces its roots back to the 1970s, filed for bankruptcy protection in March last year after struggling to make money in an industry squeezed by stagnant economic growth.
3. Reasons for cigarette ban soon:
Government has agreed to provide the Fair Trade Independent Tobacco Association with reasons for maintaining its ban on cigarette and tobacco product sales under level 4 of the lockdown.
The association, whose members include cigarette makers Carnilinx and Gold Leaf Tobacco, had launched an urgent court bid for government to lift a ban on sales of cigarettes and tobacco products during lockdown and to have these products be deemed essential goods.
The association also sought minutes of the meetings in which government made decisions pertaining to the sale of cigarettes.
In the responding affidavit, the minister said there was “nothing sinister” behind government’s decision to keep enforcing the ban. She indicated that the decision to promulgate the regulation on the ban was taken “after careful consideration”, not only based on submissions received from the public but also “relevant medical literature”.
4. JSE cuts fees and offers more relief:
South Africa’s Johannesburg Stock Exchange (JSE) will offer temporary relief to companies in financial distress because of the coronavirus crisis, including cutting fees for new listings and extended payment terms, it said on Monday.
Pressure on business following lockdown measures to slow the spread of the novel coronavirus has led to an increase in companies filing for business rescue – a local form of bankruptcy protection.
“The small cap counters are among the most vulnerable in strained markets. The discounts we are announcing for these market segments are aimed at stimulating liquidity and supporting this vital growth node of our economy,” JSE Group Chief executive Leila Fourie said in a statement.
Under the measures, the JSE will grant distressed companies extended payment terms of between three and six months, with no interest charged and offer a 50% fee reduction for trading, clearing, and settlement in all companies listed on the JSE AltX and BEE Board for the remainder of 2020, it said.
The JSE is also reducing listing fees by 25% for those small companies and AltX companies looking to tap the market to raise secondary capital.
5. SAA order to be appealed:
Administrators trying save South African Airways (SAA) will appeal a court ruling that ordered them to halt a layoff process, one of the administrators Siviwe Dongwana told Reuters.
State-owned SAA has been fighting for its survival since entering a form of bankruptcy protection called “business rescue” in December. Its fortunes deteriorated when the coronavirus pandemic forced it to halt all commercial passenger flights and the government said it would not provide further funding.
The Labour Court’s decision to side with two trade unions in its judgment on Friday was a major blow to the administrators as they have said that layoffs are necessary to avoid the airline being liquidated.
The court ruled that it was “procedurally unfair” for administrators Dongwana and Les Matuson to issue notices to workers about consultations on layoffs without having first presented a business rescue plan.