Bid for Protech turns on BEE trust’s status
THE drama surrounding Eqstra’s “hostile” bid for listed construction and engineering group Protech Khuthele is taking many twists and turns.
Most recently, Protech posted a response circular to shareholders, dismissing the construction equipment leasing and contract mining group’s offer of 60c a share.
This came after independent advisers PwC said the offer was “unfair and unreasonable”. PwC concluded that Protech’s market value on a controlling basis was 79c to 88c a share. In its latest announcement, Protech says it is looking for clarity that good governance and due process are behind the unconditional acceptance of Eqstra’s offer by its empowerment partner, the Protech Khuthele BEE Trust. It says legal opinion it sought on this matter suggests the trust has no authority to dispose of its shares, which amount to a 20% stake in the company. It now intends approaching the high court to have the irrevocable undertaking obtained by Eqstra from the trust set aside, also gaining “such other relief as it deems appropriate”.
But some in the industry now say the Protech BEE Trust, “that is supposedly their empowerment vehicle”, is not even recognised as such by a rating agency, as per the BEE certificate posted on Protech’s website. However, Protech says while the trust was previously recognised as an empowerment vehicle, this was withdrawn last year after poor administration led to differences. This is why the trustees resigned or were removed by Protech’s board, and is one of the reasons the legality of the trust’s irrevocable acceptance of the Eqstra offer is being questioned. Zambia. Much is made of the mining environment in SA, where there is a degree of uncertainty about the law, simmering labour tension, soaring input costs and tight electricity supplies, all covered in a layer of political meddling. But CEOs of mining companies operating both inside and outside SA point out that this is not the only country going through a difficult patch in its resources sector.
This became glaringly obvious after the extraordinary announcement from Zambian Mines Minister Yamfwa Mukanga on Friday that all gemstones mined in Zambia must be sold within the country. Gemfields said it was caught off-guard by the directive, having nurtured offshore markets to secure the highest possible prices for its emeralds.
Gemfields says it was not consulted about the decision, despite having recently agreed with the government to hold its inaugural auction of emeralds in Zambia next week. What lies behind this decision is a mystery.
The government ostensibly wants the benefits of Zambia’s mineral wealth to flow to its people, but worrying rumours are swirling around the gemstone market that it may not be as altruistic as that.
Dave Marrs edits Company Comment (marrsd@bdfm.co.za)