Trencor directors bank on shareholder support

Trencor directors up for re-election at the annual general meeting, scheduled for next week, will be hoping to get more support from shareholders than Hennie van der Merwe got at Textainer’s recent annual meeting.

Trencor’s 48% stake in New York-listed Textainer, which is one of the largest lessors of shipping containers in the world, is its dominant investment. Textainer’s weak performance over recent years explains why the Trencor share price has been on a steady downward path.

Van der Merwe, who is the chair of Trencor, is a member of the Textainer board and received just 65.5% support for his re-election at the Textainer meeting in May. Remarkably, 53.26% of shareholders did not attend or vote at the meeting, which is held in Bermuda. Attendance at Trencor’s annual meeting is more robust.

At 2017’s meeting 99.93% of Trencor’s shareholders voted to re-elect Van der Merwe and there was a 93% attendance.

The only resolution that caused a flutter was the vote on the remuneration policy, which received the thumbs down from 27% of the shareholders. It is impossible to know whether this was a knee-jerk reaction from shareholders or reflected a concern about the level of remuneration being awarded to directors who are just keeping an eye on the performance of Textainer’s executives.

Judging from Textainer’s quarterly results, there’s not much return on all that oversight. Earnings of $0.31c a share represented an improvement on the comparative quarter in financial 2017 but was about 14% below market expectations. L atest details of related party transactions that made fortunes for people in Steinhoff’s “inner circle” recall what grim experiences FirstRand has had with the South African retail sector over the years. It raises memories of FirstRand’s exposure to the Retail Africa Group (RAG), whose liquidation in 2002 was the subject of a section 417 inquiry. Rightly or wrongly the bank emerged from the process as the chief culprit in a liquidation that cost about 2,500 jobs.

It was the lead bank in a consortium that decided to pull the plug on a R160m funding facility that the precariously positioned RAG depended on.

The marauding it got from the RAG inquiry might explain why FirstRand executive Theunis Lategan, a major player in the RAG inquisition, was so keen to ensure another of its retail exposures, Profurn, caused less embarrassment. According to Bloomberg back in 2002 Lategan asked German industrialist Claus Daun, who was instrumental in building Steinhoff into a global retail group, to help rescue furniture retailer Profurn.

Profurn had grown like topsy by providing unsecured credit to almost anyone who ventured into their stores. While this strategy is a sure way to boost the top line it quickly ends in tears. At the time of its near-implosion, FirstRand held 78% of Profurn.

In early 2003 the JD Group issued 53.7 million shares valued at R18.42 a piece to Profurn shareholders and secured control of the company. The share issue resulted in FirstRand ending up with 25% of the enlarged JD Group, which it sold on to Daun for, according to Bloomberg, R14.17 each.