Adams declares war on ‘activists’

SHAREHOLDERS CALL FOR NEW DIRECTORS Concerns over Grand Parade Investments’ governance and poor results.

Hassen Adams, founder and executive chair of Grand Parade Investments, is fuming and has accused a group of shareholder activists of launching a “hostile takeover”.

The shareholders, who collectively hold 12.5% of GPI, have been granted an extraordinary general meeting (EGM), which will be held on October 31.

The purpose is to give shareholders the opportunity to vote for four new independent directors, ostensibly to deepen the board’s skills and independent oversight.

The activist shareholders have also requested that all existing nonexecutive directors be put forward for re-election to reinstate good corporate governance.

Adams does not believe their intentions are honourable.

“… I suggested we accept two of their nominations. But they want all or nothing. On that day, we declared war. The battle is on.

“They want to destroy my legacy. For me, it is not about the money. It is about the thousands of shareholders who believe in me.

“I’m sending a letter to all the institutions – they must know their blue-collar investors are being abused by these guys. I’m also going to look at a political intervention. Quite frankly this cannot happen. If it was ... for the right reasons then, yes. But it is not.” The Grand Parade Investments is a black empowerment (BEE) success story. It was founded in 1997 to partner Sun International as its primary BEE partner and listed on the Johannesburg Stock Exchange’s main board in 2008.

It expanded its gaming investment portfolio, adding slot machines and other investments.

All went swimmingly, with the share price eclipsing R7 in 2014 and dividend payments remaining generous.

But in 2014, the Grand Parade Investments changed tack, claiming onerous regulatory requirements in the gaming space.

It sold off part of its gaming portfolio and diversified into quick-service restaurants, rolling out Burger King and, more latterly, US brands Baskin-Robbins and Dunkin’ Donuts.

Since 2013 it is estimated that capital expenditure plus losses incurred by the foods division add up to about R1.4 billion. In the year to June, headline earnings from core investments declined from a loss of R20.1 million last year to R48 million this year.

The share price has declined to R2.05. Dividends are declining, with the 11.5c declared in June, half what it was in 2017.

Shareholders have requested the EGM include Denker Capital, Kagiso Asset Management, Westbrooke Alternative Asset Management, Rozendal Partners and Excelsia Capital.

This follows several failed attempts by them to constructively engage with the board about governance concerns, poor results and the departure of two chief executives in 18 months, as well as a chief financial officer and the chief executive of Burger King SA.

“These are yuppies who are gambling with blue-collar money,” says Adams. “GPI is trading at a big discount to its [net asset value], all they want to do is strip the assets – there is R3 billion worth of assets in the business.

“This is being done under the guise of activism, but they are nothing more than hyenas.”