Show us the hedge

Net­care’s ma­jor share­holder cashes out R115m

Finweek English Edition - - Companies & Market - SIKONATHI MANTSHANTSHA sikonathim@fin­

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


Still heav­ily in­volved

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