‘No debt, just cash’

…as Afripalm sells again

Finweek English Edition - - Companies&markets - SIKONATHI MANTSHANTSHA

AF­TER COM­MIT­TING 3m of its Mve­laphanda Re­sources shares to a low-priced hedge two weeks ago, in­vest­ment hold­ing com­pany Afripalm de­nied it was pressed by po­ten­tially crip­pling debt with which it had funded its in­vest­ment in the min­ing in­vest­ment com­pany. Afripalm-con­trolled Mve­laphanda Re­sources then sold a sig­nif­i­cant amount of its stake in plat­inum pro­ducer Northam Plat­inum. Last week it sold some of its shares in prop­erty group Growth­point to raise al­most R2m.

The 124 000 Growth­point-linked units sold last week were only a frac­tion of the 6m linked to Ragi Moon­samy, who sits on the prop­erty in­vest­ment com­pany as a rep­re­sen­ta­tive of Uni­palm In­vest­ments. That’s the in­vest­ment hold­ing ve­hi­cle of Afripalm Re­sources, headed by Mvela Re­sources and Northam chair­man Lazarus Zim.

Moon­samy told Fin­week (6 May) the com­pany was “as healthy as healthy can be” af­ter we queried the hedge in Mvela Re­sources. He sits on Growth­point’s board as a rep­re­sen­ta­tive of the black em­pow­er­ment con­sor­tia, which own a to­tal of 8% of the com­pany. Uni­palm’s web­site states it owns a third of the AMU Trust, which owns Growth­point’s em­pow­er­ment stock.

No rea­son was of­fered for the lat­est sale. How­ever, we re­ported Moon­samy say­ing the com­pany was sell­ing shares “to gen­er­ate cash flows for the op­er­a­tions of the com­pany” (Afripalm) as it in­vests in long-term min­ing as­sets, which only gen­er­ate rev­enue af­ter years. That surely still ap­plies to the Growth­point trans­ac­tion?

The 12, 21% sale of Northam to ENRC was ef­fected as the first step in the un­bundling of Mvela Re­sources’ as­sets to its own share­hold­ers (Mvela owned 62,8% of Northam) and to wipe out Mvela’s debt obli­ga­tions. “In no way are we fi­nan­cially chal­lenged in any form,” said Moon­samy. “We’re en­joy­ing the fruits of our labour.”

Mikki Xayiya is one Mvela di­rec­tor who can’t le­git­i­mately claim to be “en­joy­ing the fruits” of his labour at the com­pany. He re­cently took de­liv­ery of 660 000 shares at an ex­er­cise price of 2241c/share for a R14,8m cash lay­out. The cur­rent mar­ket price of the se­cu­ri­ties is R31,3m. What busi­ness does he have with in­cen­tive op­tions in the com­pany? Mvela’s prac­tice of award­ing share op­tions to Xayiya con­flicts with ev­ery mod­ern good cor­po­rate gov­er­nance guide­line.

Xayiya is a non-ex­ec­u­tive di­rec­tor at Mvela Re­sources and deputy chair­man and co-founder of its un­listed par­ent com­pany, Mve­laphanda Hold­ings. But then again this group can’t be ac­cused of be­ing a big fan of good cor­po­rate gov­er­nance. It con­trols the listed Mve­laphanda Group, with Xayiya at the top as ex­ec­u­tive chair­man. He took over that role when Tokyo Sexwale left for po­lit­i­cal of­fice last year. As Mvela Group is in the mid­dle of a re­struc­tur­ing, Fin­week can only hope good gov­er­nance is one of the is­sues it will take more se­ri­ously.

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