Swashbuckling miner and financier Brett Kebble has lost control of his empire, and the future looks bleak for the network of empowerment companies he has cobbled together.
A Western Areas spokesperson confirmed on Wednesday that Kebble was forced by his shareholders and bankers to relinquish control of JCI, the citadel at the heart of his family’s beseiged empire, stepping down as CEO.
He also quit Western Areas, the vehicle for his most valuable asset — a massive gold reef 3,5km below the ground at South Deep — and stepped down as CEO of Randgold and Exploration.
He keeps his board seat at JCI, but is off the boards of both Western Areas and Randgold.
A statement due out as the Mail & Guardian went to press was expected to say that Kebble would now be concentrating on JCI’s portfolio of empowerment companies. These include Orlyfunt, which holds various mining, property and other interests subject to a loan agreement with JCI, and Pikoloso, which is at the centre of controversy over the transaction that saw it buying into Randgold.
A host of smaller ventures domiciled at JCI House in Bishopscourt involve, among others, former Western Cape African National Congress leader Chris Nissen, former ANC Youth League officials such as Lunga Ncwana and Songezo Mjongile, and Sharif Pandor, the husband of Education Minister Naledi Pandor. Orlyfunt, which was at the heart of JCI’s empowerment plans, now looks doomed.
“The Orlyfunt thing is not going to work. That dog has died, it just isn’t buried yet,” a source close to the restructuring plan told the M&G. “The new guys at JCI are going to take a hard look at all those deals, but you can be pretty sure Orlyfunt won’t make it.”
Nissen confirmed that Orlyfunt would not figure in a restructured JCI, but he said the company’s empowerment portfolio would not suffer as a result. “You just have to look at JCI’s track record, and what Brett Kebble has done in terms of supporting companies. So I am excited about the restructuring,” he told the M&G.
This is significant because in December 2004 JCI “sold” a swathe of its empowerment joint ventures to Orlyfunt, getting in return 40% of its equity, and an R900-million loan acount. That arrangement is now set to be dismantled, with uncertain consequences for the underlying companies.
No officials from the company could be contacted by press time, and Kebble did not respond to requests for comment made through his spokesperson David Barrit.
The change of control at JCI, Randgold and Western Areas came as a result of growing frustration from shareholders and bankers over the lack of transparency at JCI, which coincided for the first time with an intense cash crunch at the company that gave them greatly improved leverage.
Western Areas needed a capital injection to fund new investments in the complex South Deep project, and JCI couldn’t come up with the cash to take up its rights.
Investec Bank, meanwhile, was exposed to substantial liabilities on the derivative contracts it had developed for Western Areas, and wanted to see the project move ahead. “That was the catalyst,” said one analyst familiar with the circumstances.
Investec has now provided the cash that will enable JCI to underwrite a new R700-million rights offer, but its price for providing it, according to sources close to the deal, was Kebble’s head.
Western Areas’ financial director Chris Lamprecht is to take over as acting CEO.
Wednesday’s moves ended a death watch over JCI after both it and Randgold failed to file annual financial statements in time to satisfy JSE Securities Exchange rules.
Shareholders, including asset manager Allan Gray, which holds 25% of Randgold, mining group Aflease, with 12%, and Trinity Holdings, with about 5%, have asked Kebble to explain how R1,3-billion worth of shares in Randgold Resources appear to have been sold off without their knowledge or consent. Randgold Resources is Randgold and Exploration’s only major asset.
Aflease has called for a share-holder’s meeting that could take as long as six weeks to convene, and may now have been pre-empted by Kebble’s resignation.
Aflease financial director Jean Nortier stressed that there had been no coordinated pincer movement by shareholders and lenders to achieve his ousting, however.
“We’re shareholders with an interest to protect; we know Stephen Mildenhall at Allan Gray has had his concerns, but we are the only guys that called the meeting.”
It may sting Kebble, however, that Trinity’s Quinton George, previously seen as one of his allies, is backing the Aflease move.
“I make no bones about my relationship with Brett Kebble. We have been an investor in his companies, but in this instance we are simply protecting the interests of our shareholders,” he told the M&G.
Trinity has also gone into business with Aflease merging its interests into Aflease’s gold division. Nortier says the timing of that deal is pure coincidence.
“We wanted to focus on gold assets and build that business. With Randgold the strategy is simply to realise value, and get out,” he said.