Group Five needs to go on notice over notice
Given how tense things are at Group Five, you’d think it would make sure it gets the stuff it can control right — such as the notice sent to shareholders with details of an extraordinary general meeting.
It may be that, if there were a challenge, a court would rule in favour of Group Five, which claims the proxy form sent out to shareholders is legally competent and the proxies valid.
But, by stating that proxies must be submitted 48 hours before the meeting, the board has created uncertainty. It has opened the way for a disgruntled shareholder to challenge the validity of every proxy vote on the grounds that the proxy form was invalid. It may seem an arcane legal point, but that’s precisely the sort of stuff that keeps the legal profession in clover.
Presumably, the 48-hour deadline was an oversight and not done with a view to delay the outcome of a critical extraordinary meeting. No matter whose nominations win the day — whether Allan Gray’s five or the company’s four — it is urgent that the board appointments be finalised as quickly as possible.
In addition to the sloppy deadline matter, the notice’s reference to Allan Gray’s five nominations as a bloc vote is concerning. While it’s clear these directors are to be voted on individually, the notice refers to them as a bloc vote. The Companies Act is clear about not allowing bloc votes.
The notice also refers to a Group Five meeting getting support from shareholders, but provides no names or any indication of how many. This could contravene the JSE’s strictures on misleading information.
Agricultural services group Senwes – one of just three listings on the new ZAR-X bourse – will embark soon on a share buyback programme.
At a share price of R10.40, there seems merit in the share repurchase exercise, considering interim earnings (to endOctober 2016) came at about 58c per share.
The plan is to repurchase about 2% of the issued shares and a target range of R10.50 to R14.20 per share has been set. The plan is not to exceed a weighted average of R12.30 per share, with the maximum consideration set at R45m.
Interestingly, the board of Senwesbel, which holds a 52.55% stake in Senwes, has not opted for a share buyback exercise. On paper, there appears to be considerably more value in Senwesbel shares that would justify a share buyback. The seethrough value of Senwesbel’s stake in Senwes is worth about R1bn, but the holding company’s market capitalisation on ZAR-X is just R675m.
Perhaps, there are simply not enough shares that can be bought back from minority shareholders at Senwesbel?
The share buyback at Senwes will increase earnings per share and net asset value per share, but also reinforce Senwesbel’s position as the controlling shareholder.
It might be argued there’s more benefit in boosting liquidity in Senwes shares – which could be achieved if the archaic Senwesbel holding company structure was dismantled.
If there is a determination to retain the control structure, then such musings are purely academic. One thing is for certain: the JSE, which frowns on pyramids and artificial control structures, would not have tolerated the Senwesbel structure.