Phaphama, the controlling shareholder of New Africa Investments Limited (Nail), has welcomed the ruling by the Securities Regulation Panel (SRP) that Phaphama has
the right to vote on any resolution regarding the disposal by Nail of its assets.
Phaphama spokesperson David Barritt said this means Kagiso’s attempt to preclude Phaphama from voting will be defeated. However, Barritt said the SRP is wrong when it says that Phaphama was induced to support the bid of the Tiso Consortium because of special arrangements with its shareholders.
“From the beginning of the NAIL board’s process designed to unlock shareholder value, Phaphama acted in the interest of all Nail shareholders,” said Barritt.
“During the course of the sales process Phaphama remained completely neutral even though it was approached by almost all the bidders, including the Kagiso Consortium, to align itself with them. Only after the Nail board had completed its independent process of selection did Phaphama become involved and it then evaluated the offer made by the Tiso Consortium and that made by the Kagiso Consortium and concluded the Tiso Consortium’s offer was best for all shareholders, both those willing to stay in as shareholders of Nail and those wishing to exit.”
Barritt said that only two of Phaphama’s three shareholders joined the Tiso Consortium. To do so they had to contribute a substantial amount of risk capital to the Tiso Consortium. Accordingly the decision by the Phaphama board to support the Tiso Consortium bid constituted a separate decision from the decision of certain of Phaphama’s shareholders to participate in the Tiso Consortium.
Furthermore the decisions of the two shareholders that decided to join the Tiso Consortium were taken independently of each other and at different times. WIPHOLD, a 25% shareholder in Phaphama, is not a member of the Tiso Consortium.
Barritt said it is incorrect for the SRP to say that the Tiso Consortium controls Phaphama. “Phaphama is managed by its board and controlled by its shareholders. The Hollard group and Safika between them have only a 25% interest in the Tiso Consortium and between them control some 69,8% of the votes at shareholder level in Phaphama,” said Barritt.
Nor did Phaphama receive an “illusory” offer as the SRP terms it in its ruling but a real one which it decided not to accept because it wished to retain control over Nail.
Barritt said there are a host of other factual inaccuracies contained in the ruling including, for example, the statement that the Safika corporate finance success fee was an inducement to give Phaphama certain undertakings.
In fact this fee was agreed upon long before Phaphama decided to support the Tiso Consortium’s bid. – I-Net Bridge