The sale of Anglo’s Johnnic stake has finally come off, with a considerable discount to boot, report Madeleine Wackernagel and Tebello Radebe
The National Empowerment Consortium (NEC) has pulled off a considerable coup — control of Johnnic for a minimum amount of cash, at a 12% discount to the market price.
While the NEC’s starting point had been the full 47,4% stake jointly owned by Anglo American and De Beers, the compromise of an initial 20%, topping up to 35% in 18 months’ time, is “realistic”.
“The NEC could not afford the whole 47,4%; as it is, we won’t know until the end of the 60 days if we succeed in raising the R1,5-billion. That will depend on the share price movements. But at this price we shouldn’t have a problem,” says an insider.
Indeed, there is plenty of upside in the Johnnic share price: earnings for the year to June, announced on Wednesday, rose 41% to R489,5-million, thanks in large part to the strength of its associated investments.
There is now speculation that some of these will be sold, with the 26,4% Toyota stake first in line, but this could not be confirmed.
Instead, said the NEC’s Cyril Ramaphosa, the agreement opens the way for a “long- time” partnership with Anglo — one of South Africa’s largest conglomerates.
Speaking during the announcement of what is arguably the biggest black economic empowerment deal to date, Ramaphosa said: “We want Anglo American to remain our partner for a long time.”
To this end the two parties have agreed to set up a deadlock mechanism — an arbitrator — who will be enlisted in the event of disagreement between the new Johnnic board members, comprising 10 representatives each from Anglo and the NEC, with an NEC chairman.
However, said Ramaphosa, “we hope it never comes to that”.
He said he believed Anglo will not “unreasonably block board decisions that will be in the interests of shareholders”.
Although the deal allows the NEC to buy 20% of Johnnic for R1,5-billion in 60 days, as from July 1, and up to 35% in 18 months’ time, the agreement also provides the NEC with equal voting rights to Anglo through a shared voting pool arrangement. A further 6% of Johnnic shares, worth R405-million at the current price, will be sold by the NEC to smaller NEC members and others within the black community.
The two further agreed that the Securities Regulation Panel should make a ruling that it will not be necessary for the NEC to make a comparable offer to other Johnnic shareholders should the NEC acquire 35% or more of the issued share capital.
During the 60 days allowed for the NEC to raise the cash to buy their stake and before a new Johnnic board is appointed, NEC will conduct a due diligence investigation into the affairs of Johnnic.
“We’re not buying in [into Johnnic] to sit there without adding value,” said Professor Wiseman Nkuhlu of the NEC, referring to the undertaking by NEC that additional Johnnic staff may be included but existing employees will keep their jobs. In addition, the NEC also undertook to enter into negotiations about an editorial charter for Times Media Limited publications as soon as the sale has been concluded.
Ramaphosa was adamant that in the end an editorial charter that is “acceptable to all” will emerge in the interests of editorial freedom.