A great story to tell

Seelan Gobalsamy, the CEO of Omnia Holdings, talks about steering a company through crises.

- Timothy Rangongo

When Seelan Gobalsamy first joined the board of Omnia as a non-executive director in September 2018, the diversified company that supplies chemicals and specialised services and solutions for the agriculture, mining and chemical application industries was in dire straits with its debt, and holders of the stock had lost confidence and gradually sold it en masse.

By 2019, Omnia’s share price had dropped by more than 85% over the preceeding five years. While Omnia saw a steep increase in its share price at the end of 2017 after announcing higher-than-expected profits and a slight increase in sales, the opposite happened when its full-year results showed a slump in profit six months later. At the end of 2018, its share price slid further when it announced a loss for the first six months of the 2019 financial year.

“The board started seeing that there were these dark clouds on the horizon and something very major needed to be done,” recalls Gobalsamy of the headwinds. In early 2019, the Omnia board sat down and made some management changes. The business also did a rights issue to pay off a large chunk of its debt.

“The business had about R6.3bn of debt at that point and it did a R2bn rights issue, which was quite big at the time,” he says.

“A lot of companies face that, where they have a lot of debt and about three options. The first could be to sell some assets; second, buckle down with heads in the sand and hope it will go away; or third, go to shareholders and say that we need more money — which is what we did.” Omnia received the support of 98% of its shareholders to raise the R2bn it needed, according to the company at the time.