No real winners as Accentuate’s battle-weary activists drop shares

THE decision to abandon a long and increasingly bitter battle for a place on the board of AltXlisted flooring company Accentuate will no doubt please the incumbent board and the JSE — but leaves some troubling corporate governance issues unresolved.

Last week, a group of shareholder activists, led by Adolf Potgieter, decided to abandon their five-year bid to get representation on the Accentuate board and sold their 28% stake in the company to private equity outfit Trustee Board Investments.

Potgieter said he and his coinvestors, who bought in expectation of reasonably bullish growth prospects, sold out at around the 60c a share they had paid back in 2010. But the small loss on the exit price was dwarfed by the hefty opportunity costs involved in the prolonged battle.

Not only did the activist shareholders miss out on much more attractive returns from other equities boosted by the JSE’s long bull run, they also ran up some steep legal costs in trying to pursue what they believed were their rights as shareholders.

They suspected their rights were threatened because of concerns they’d raised about a number of deals done by CEO Fred Platt.

The hottest part of the battle between Potgieter and the board, directed by Platt, centred around the board’s ability several times to prevent the shareholder activists from voting their shares. At both the 2013 and 2014 annual general meetings, a large chunk of the activists’ stake was blocked from voting on the grounds that the beneficial owner of the shares had not been disclosed.

Blocking the votes enabled the board to pass a number of controversial resolutions, which the activists had voted against.

After the 2013 AGM, the activists turned to the high court to prevent the board from implementing the resolutions; they also wanted the court to overturn the board’s decision to disallow their votes.

Amazingly, the high court’s ruling was handed down only in March this year. It ruled in favour of the board and awarded costs against the activists. In the meantime, the activists had commenced battle over their voting rights at the 2014 AGM.

The JSE, which usually seems so uncomfortable with any controversy that might tarnish its World Economic Forum standing as a number-one place for shareholder rights, was dragged into this battle.

Eventually, a battle-weary Potgieter, who still believes Accentuate is operating well short of its potential, decided to throw in the towel.

No doubt the majority of shareholders, who evidently prefer a quiet life, will be pleased to hear that Platt is looking forward to “a constructive and mutually beneficial relationship” with the new shareholders.

Hedge-less funds

It seems as though nobody is escaping the turmoil that has wreaked havoc on investors worldwide, not even the hedge funds that charge their investors a fortune for the presumed safety offered from turmoil.

The dismal showing by global hedge funds prompted one Financial Times commentator to note that “if ever there were a product that has failed to do what its name suggests . . . it is the hedge fund”.

Hedging strategies and managers have proved as incapable of avoiding losses as their less hubristic and cheaper cousins — the common or garden in- vestment fund.

If it is unreasonable to expect hedge funds to avoid being hit by falling markets, says the FT, then perhaps it would be appropriate to stop calling them hedge funds and stop them charging fees on the basis that they act like hedge funds.

Woolies

It seems Zyda Rylands’s appointment to the top slot at Woolworths SA was just half of the executive appointment story at our increasingly popular retailer.

Rumour has it that Christo Claassen, who moved from Edcon to head up Woolies’s clothing and general merchandise business, will be shifting a little bit upwards and sideways.

Claassen, considered to be a great catch for Woolworths, is expected to lead the group’s clothing strategy and will be responsible not just for South Africa and Africa but also Australia. This means Claassen will be reporting not to Rylands but to overall chief Ian Moir.

And then there’s the appointment of Australia-based Gail Kelly to the main board. Kelly, a South African, won a large and enthusiastic following for her considerable skills as a senior executive at Nedbank before taking up a top job in Australia.

Cracks in the Brics-work

For years, we struggled to persuade the world — as well as Brazil, Russia, India and China — that we deserved to be the S at the end of Brics. Finally, about one year ago, it looked as though we’d secured our position. Almost immediately it all began to fall apart.

Nobody with any money or cloutwanted anything to do with Russia; then Brazil’s very dark side began to become apparent as the level and scale of corruption among top politicians there made the ANC look pretty amateurish: and increasingly it seemed China’s unbelievable growth story was just that.

Perhaps the good news is that we’re not being outshone by anyone in our Brics gang.