Showdown at Grand Parade over new board
There’s going to be a tense showdown at Grand Parade Investments (GPI) at the end of October.
An extraordinary shareholder meeting will consider proposals from shareholders that speak for 12% of GPI to nominate four new directors to the board. GPI’s executive is not entirely enamoured with the proposals and suggests board changes will compromise the spirit of a community-based broad-based BEE company.
What’s more, GPI executives — notwithstanding the group’s steep share price decline over the last five years — are adamant the existing strategy should not be disrupted.
The “activist” shareholders — comprising asset managers Denker Capital, Excelsia Capital, Kagiso Asset Management, Westbrook Alternative Asset Management and Rozendal Partners — have stressed the current board’s skills and experience are not aligned to the company’s strategic intent, which revolves mainly around rolling out the Burger King fast food franchise.
The proposed new board members can’t really be faulted and it seems strange that GPI’s executives are so resistant.
Seapei Mafoyane is CEO of Shanduka Black Umbrellas with extensive previous executive experience at SABMiller, Standard Bank and Discovery Health. Mark Bowman is a former MD for SABMiller Africa, and Cora Fernandez is a former CEO of Sanlam Investments.
Perhaps the most intriguing candidate for the GPI board is Ronel van Dijk, previously CFO of Spur Corporation (where GPI is a significant minority shareholder). Van Dijk’s insights into the fast food and restaurant sector could be invaluable for the ongoing Burger King thrust.
One can’t pretend to be surprised at the news that cash hoarding industrial services business Howden Africa is considering delisting from the JSE. There was something disturbingly defiant in the company not paying a dividend since 2013 despite its cash pile growing — at last count — to over R1.3bn.
This week Howden, which is 55% controlled by US industrial giant Colfax, said it would consider pursuing a delisting via a share buyback exercise.
That’s a crafty move, coming not long after a resilient Howden finally showed some fallibility in these trying economic conditions. No indicative price was offered, but judging by the stubbornness around dividends it seems unlikely a share buyback will be executed at a huge premium to the market price.
What’s more, the Howden share price remained resigned after the delisting announcement. Officially, Howden cited the share’s relative illiquidity and analyst coverage as the prime reasons for seeking a delisting.
The level of resistance to the delisting proposal will be interesting to gauge. Frustrated minority shareholders may have already endured too much and may well be content to capitulate. But it’s worth noting that at the ruling share price Howden carries a market value of about R2.3bn — of which 57% is represented in free cash.
Howden has enough cash sloshing around its balance sheet to take out all minorities in the share buyback exercise.
It just seems wrong for a quality company to want to shuffle off in this manner.