Show us the hedge
Netcare’s major shareholder cashes out R115m
MOTTY SACKS, founder and former CE of hospital chain Netcare, has sold shares valued at R115m in the company. Without revealing any details, Sacks says the transaction was “to facilitate a hedge transaction for the Netcare Executive leveraged bonus scheme”. No details about the hedge itself were given.
Now a non-executive director, Sacks sold 8,5m of the 29,7m shares he owned directly and indirectly in the year ended September 2009, making up 2,3% of Netcare’s total issued share capital. Although the transaction was conducted to hedge an executive bonus scheme, Sacks was listed as the direct beneficiary. The sale leaves him with 21,2m shares – still the company’s largest single individual shareholder.
The only clue about the transaction could be found in the annual report, which states that in May 2009 the group entered into a leveraged bonus scheme with a financial institution. “The bonus obligation yielding the benefits has been settled by the group during the year following a hedging arrangement entered into with the financial institution,” says the report. It said the bonus obligation is expensed in the income statement over the vesting period of the options.
That still fails to answer the fundamental question about Sacks’ involvement in such a scheme. As a non-executive, Sacks (correctly) receives no share options.
However, the transaction he conducted last week directly benefits him personally. Although he’s been on Netcare’s board since 1996 and he resigned his executive responsibilities and then chairmanship in 2008, the company is still heavily reliant on his hands-on expertise. Transaction proceeds of R115m will add to the total R1,7m director and consulting fees Sacks was paid over the past year. The previous year Sacks was paid consulting fees of R2,7m by Netcare, in addition to director fees of R422 000.
Sacks wasn’t the only seller of Netcare shares last week. Stakeholder relations director Victor Litlhakanyane immediately sold the 200 000 shares he’d recently taken possession of in vesting options. Smiling all the way to the bank, he pocketed profit of R936 000.
Another major transaction was conducted by investment holding company Remgro. The Cape-based company sold its entire stake in packaging company Nampak, because it deemed it “non-core”. Remgro hasn’t yet exactly decided how to deploy the R1,35bn proceeds from the sale of 78m Nampak shares. However, it has indicated the money will find its way to boost its core investments (see report by Marc Hasenfuss on Fin24.com).
Still heavily involved