Marc Hasenfuss: Market Watch

the meeting to confirm that Sovereign chairman Tom Pritchard was asked, very clearly and very politely, on no fewer than four occasions, to identify the joint venture partner that holds 65% of the factory shop operation. Though there was clearly consultation among directors after the questions were posed, never did Pritchard or any other director disclose the identity of the partner.

More importantly, no Sovereign director, at any time in the meeting, indicated either that confidentiality clauses precluded identifying the partner or that directors might respond to shareholders after consulting with the partner about disclosing its identity.

This is basic corporate communication, chaps: “Leave it out and sow doubt; obfuscate and they’ll speculate.”

I suspect, though, that Sovereign has more pressing issues than improving shareholder engagement. At the AGM, special resolution number two, which dealt with the repurchase of shares, was voted down by shareholders. I must confess to not being sure if this will have implications for Sovereign’s proposed empowerment transaction, which involves a share buy-back. Country Bird Holdings (CBH), which is bidding to take over Sovereign, certainly believes the BEE deal can’t go ahead without a share repurchase agreement being in place.

But I’m sure it can be argued that a previous resolution on share buy-backs is applicable and that events at last week’s AGM can’t be applied retrospectively on the empowerment transaction. I foresee Sovereign spending more time (and money) in court, especially now that CBH has secured a blocking stake of more than 25%.