DARREN SCHUETTLER, Johannesburg | Monday
AILING South African steel group Iscor has urged investors to reject what it called an “opportunistic” bid by two major shareholders to shake up Iscor’s board and remove its executive chairman.
Anglovaal Mining Ltd (Avmin) and the Industrial Development Corp (IDC), which together hold 26% of Iscor, last week proposed to replace six of Iscor’s 12 directors, including Executive Chairman Hans Smith, whom they blame for the company’s poor performance.
But Iscor’s board fired back, setting the stage for a bitter fight for control of South Africa’s biggest steel producer.
Iscor described the Avmin/IDC revolt as “opportunistic” given the planned announcement on March 1 of its restructuring proposals aimed at unlocking value for Iscor shareholders.
“The actions of the Avmin/IDC alliance will disrupt and delay the process of the implementation of the restructuring proposals and will therefore delay the timing for unlocking shareholder value,” Iscor said.
Iscor has delivered poor results in recent years, partly due to record low world steel prices. The company is also struggling under a mountain of debt from its loss-making Saldanha Steel joint venture with the IDC.
Saldanha last week reported a loss of R505m for the six months ended December 30, compared to a R453m loss for the same period a year ago.
The IDC, which owns half of Saldanha, has baulked at pumping in its R2bn share to recapitalise the project, which is R6.8bn in debt.
The IDC said in a joint statement with Avmin that it “does not feel comfortable investing further taxpayers’ money with the current management in place”.
Avmin executive director Brian Menell has also accused Smith and his board of poor performance, saying Iscor’s market capitalisation had fallen by more than R7bn to R3bn during their six years of stewardship.
Iscor’s Smith said Saldanha might close if IDC failed to inject its half of a R4bn refinancing package.
Iscor itself agreed last November to take R2bn of Saldanha’s debt onto its balance sheet.
Smith also vowed to fight what he called an “unholy alliance which seeks to benefit selected shareholders at the expense of the rest”. – Reuters
ZA*BUSINESS:
Avmin looks to give Iscor a shake-up February 1, 2001