More than a back door to Caxton
UNLISTED INVESTMENT company Element One holds as its sole asset – other than cash – a 39,8% (direct and indirect) stake in media group Caxton. Element’s holding in Caxton translates to around 1921c/share – considerably higher than the top bid on the over-the-counter market of 1710c. Okay, so there’s value to be had. However, Finweek reckons there’s a bit more to Element One than simply being seen as a “cheap” backdoor entry into Caxton.
Element – guided by the astute Danie Vlok – has been embroiled in prolonged legal spats with Caxton in an attempt to determine what contractual obligations were tagged to the shares it owned (directly and indirectly) in Caxton. The nub of the matter is whether Element is allowed to sell the shares to a party of its choice or whether there are restrictions on selling those shares.
While a recent judgment ruled no restrictions were applicable to Element’s Caxton shares, the court also granted Caxton Ltd – the controlling shareholder of Caxton – a 30-day right of refusal over the shares held by Element. Element, obviously appealing that judgment, has since uncovered documents that “strongly suggest” it may have substantive rights of pre-emption over the shares held by the controlling shareholders of Caxton – including the right to acquire control of Caxton on the deaths of prime movers Terry Moolman and Noel Coburn.
Perhaps – more significantly over the short term – the documents also suggest Element is entitled to board representation on Caxton.
Element has gone out of its way to dismiss notions its actions shouldn’t be construed as a tilt to break up Caxton or destroy the current control structure – stressing the need to be able to place a realistic value on its investment. Realistic is perhaps the operative word. If Element is free to entertain offers for what constitutes an influential stake in one of SA’s media giants the bid could well be well above the value reflected on the balance sheet.