Time for GPI to make amends to investors
Cape-based empowerment group Grand Parade Investments (GPI) has been through a horrid few years. It recently appointed its fourth CEO in three years, it got into a public spat with some of its shareholders, and its food division has incurred staggering losses. Even so, things could actually be improving.
The closure of its cash-draining Dunkin’ and Baskin-Robbins outlets would free it of brands that have cumulatively incurred R96m in losses in SA since 2016. The appointment of former SABMiller executive Mark Bowman and former Spur financial director Ronel van Dijk to its board (after considerable shareholder pressure) provides it with much-needed skills.
GPI also made some progress in turning around the performance of its Burger King fast-food franchise operation. It is planning to shut down underperforming outlets and has learnt from its initial mistakes, resulting in all the stores it opened over the 18 months operating profitably.
GPI still has a long way to go but it should be commended for at least starting an operational clean-out. Even so, it’s time for the group to mend its relations with its disgruntled shareholders. GPI’s leadership has to acknowledge they have some good ideas, like their push to have Bowman and Van Dijk appointed to its board.
It should follow the example of former Pepsico CEO Indra Nooyi, who responded well to pressure from an activist shareholder between 2012 and 2016. She said she saw it as “painful” but also as “free consulting”.
The SA government and those of Zimbabwe and Zambia unceremoniously lost their tenuous claim over a massive manganese deposit found by an Australian company in SA. The Constitutional Court made a ruling that was so damning of the conduct of the department of mineral resources that new minister Gwede Mantashe simply has to be stung into action.
The undertone of the judgment was that the department went out of its way to ensure a deeply flawed prospecting right application by ZiZa and the Pan African Mineral Development Corporation, the entities owned by the three governments, was not rejected and ultimately approved by the minister.
Against this, an Australian company, Aquila Steel, had applied for prospecting rights over the same ground and sunk R157m in an exploration programme, finding an enormous manganese deposit.
Justice Edwin Cameron not only lambasted the department for not rejecting a clearly deficient application from ZiZa, but for then behaving badly towards Aquila, scrambling to ensure the three governments could keep their hands on the deposit.
But there was another point Cameron raised that must surely raise deep concerns for those in the department who are engaged in accepting substandard prospecting rights for politically connected or wealthy individuals and driving them through the processes.
He noted that any “malperformance” by a regional manager in accepting a defective prospecting right, which by law the manager is compelled to reject, would open the way to those who have been deprived of mineral rights in these cases to approach the court.
In other words, those dodgy prospecting rights awarded by the department could very well be challenged by competent explorers and miners, unlocking SA’s mineral wealth.