‘No purge of Firestone directors’
FIRESTONE Energy’s major shareholders have dismissed claims that they are purging directors who appear to be standing in the way of a takeover bid from Australianlisted Waterberg Coal Company.
Earlier this month, four directors of the JSE and Australian Stock Exchange-listed Firestone quit — David Perkins, Jack James, Oren Zohar and Kobus Terblanche.
The Waterberg Coal Company has its eyes set on Firestone’s primary asset, a joint venture with Sekoko Resources to mine the Waterberg coal deposits in Lephalale in Limpopo.
Analysts rate the Waterberg coalfield as the “future of coal-mining and electricity-generation activities in South Africa”.
The project already has an offtake deal with Eskom. The parastatal has signed a memorandum of understanding for Sekoko to deliver 10 million tons of coal a year to Mpumalanga’s power stations. Once running, the Sekoko/Firestone venture promises to be the country’s third largest, after BHP Billiton and Exxaro.
Waterberg recently joined the party, buying a 10% piece of the action directly from Sekoko. Should its takeover bid succeed, Waterberg will also get Firestone’s 60% share of the project, putting it in line for the lion’s share of the expected mega profits.
But there is already blood on the boardroom floor — specifically that of Firestone’s directors.
Waterberg already owns 43% of the company, and last month it asked Firestone to convene a shareholders’ meeting to remove deputy chairman Perkins as a director.
This was withdrawn when Perkins resigned on June 14, along with nonexecutive directors James and Zohar.
A few days later Waterberg asked for another meeting to remove Terblanche, also a nonexecutive director. Terblanche also beat them to it, resigning three days later.
This appears to be an effort to purge those obstructing Waterberg’s ambitions.
Firestone has advised shareholders to reject Waterberg’s bid, which involves offering their shares in exchange for those of Firestone. It has been an ill-tem- pered battle: Firestone hauled Waterberg before the Australian Takeover Panel for withholding information from shareholders, among other things.
Last month the Australian panel ruled that Waterberg’s conduct was unacceptable, and ordered it to do a number of things, including revising its bidders’ statement.
Even this didn’t placate Firestone. It again advised shareholders to reject Waterberg’s offer or withdraw their acceptance. Then the resignations began.
Stephen Miller, executive director of Waterberg, told Business Times that Waterberg asked for these resignations so Firestone’s board would reflect his company’s majority shareholding.
Miller himself and Waterberg chairman Brian McMaster replaced James and Zohar who, even though they were directors of Waterberg’s subsidiary Ariona SA, had strangely urged Firestone shareholders to reject the takeover bid.
Despite Firestone’s entreaties to shareholders, Miller said very few investors — holding just five million of the company’s 3.5 billion shares — withdrew their acceptance of the offer.
“The rest of the shareholders saw nothing wrong with the bid,” said Miller.
South African shareholders will have the opportunity to participate in the offer when Waterberg goes ahead with its listing on the JSE, which has been delayed by a few weeks. “We hope to have a listing by the middle of July,” said Miller.
Firestone chairman Tim Tebeila, who also chairs its largest shareholder Sekoko, said Sekoko supports the Waterberg deal as it will kickstart the project. “We will not grow in the current format,” he said. “We can only grow through the merger.”
Tebeila said Waterberg brought the skills and cash that the project needed. Miller said the market was “not convinced” by Firestone, so changes had to be made.
He says the takeover is now “absolutely” a done deal. Production is now expected in the first quarter of 2015.