Stuck in limbo yet again
The cement maker has allowed speculation to mount after another boardroom tussle that has cost its CEO his job
Shareholders of 125-year-old PPC got a nasty dose of déjà vu this week as the company appeared yet to learn from its toxic boardroom fallout of 2014.
The cement maker has refused to clarify why CEO Darryll Castle — who was brought in to stabilise PPC after an unseemly fight that split the board and shareholders over the tenure of then CEO Ketso Gordhan — resigned this week after only three years in the job.
Shareholders, many of whom helped support last year’s R4bn make-or-break rights offer under Castle, were none the wiser when the Financial Mail contacted them this week.
Visio Capital, which owns 2.42% of the stock, says it got “nowhere” with PPC’S board, chaired by former Telkom financial director Peter Nelson.
But, says Visio chief investment officer Patrice Moyal: “One thing we can say is there’s a better board of directors than before and we need to give them the benefit of the doubt for now.”
Clearly, not everyone shares his confidence. PPC shares immediately dived as much as 17% on the news, before retracing slightly to close down 9%. But this means that over the past three years, its stock has shed 85% of its value.
PPC fobbed off questions to its head of corporate affairs, Siobhan Mccarthy, who told the Financial Mail that the decision to close ranks “wasn’t taken lightly. We’re well aware of the consequences, but we have taken the decision not to engage further”.
The problem is that this latest example of corporate myopia has provoked intense speculation as to what is going on at the company, which has R4.76bn in net debt, when it least needs it.
Not only is it facing challenging trading conditions at home and in Africa, but PPC’S board is distracted, yet again, by merger talks with local rival Afrisam. They’ve been dragging on since February.
The two firms have attempted to combine operations before, in 2015, but couldn’t agree on terms. Sources told Bloomberg this week that the latest round of negotiations were also floundering. One of the “sticking points” is whether to incorporate Afrisam — which is two-thirds owned by the Public Investment Corp (PIC) — into PPC’S listing on the JSE.
The PIC is, incidentally, also PPC’S largest shareholder.
It lifted its stake in the com-