Trencor delays its winding up

BOARD: COMPANY IS DRIVEN INTO A CUL-DE-SAC

Minority shareholders fuming after they were told at an AGM about the postponement.

Lichtenstein decades ago while Trencor was being built into a formidable player in the global leasing industry – insisted on this level of protection.

The $62 million (R1 billion) indemnity represents a substantial portion of the group’s value and is currently sitting in a no-interest-bearing dollar account.

Shane Watkins, chief investment officer at All Weather Capital, criticised the board for not providing details of possible claims that lay behind the need for such substantial indemnities.

Nurek would only say that the amount was agreed after tough negotiations with the trustees, who are Trencor directors. He also said the provision of an indemnity was customary and that Trencor had used law firm ENS to provide advice on the matter.

Shareholder Nic Krige told the meeting he was shocked at the size of the indemnity and, based on his research, that it was far from customary.

“What is extremely unusual is that the cash-back element is so high,” said Krige. He asked the board what Lichtenstein-based advisor they had used and said the indemnity arrangement, including costs involved in delaying the winding up of the business, would cost Trencor shareholders R500 million by December 2024.

Further indemnity

In addition to the $62 million earning no interest, there is a further indemnity of $16 million, as well as $10 million being held back for “unforeseen future events and expenses”. Furthermore, management has retained R176 million to cover operating expenses between now and December 2024.

Watkins has said the net asset value of the company is R12.25 a share, most of which is in US dollars, except for three million Textainer shares (worth 258c per Trencor share), which will be unbundled to Trencor shareholders within weeks.

At the AGM, Watkins said the out-of-touch board had driven the company into a cul-de-sac with the four-year delay destroying shareholder value.

He described the value destruction as being of epic proportion.

Trencor CEO Hennie van der Merwe said that although the cash was not earning any interest it represented an attractive rand hedge for shareholders.

Unusual that cashback element is so high.