Minorities take Acsa to court

SHARE VALUATION: DISPUTE GETS HEATED

Directors may be guilty of breach of fiduciary duties, gross negligence and misrepresentation says minority advisor.

Minority shareholders in Airports Company SA (Acsa) have been trying for the best part of a decade to sell their shares back to government after it reneged on its promise to privatise, then list the company.

In August and December last year, the high court ordered Acsa to buy the minorities’ shares and appoint a “referee” to determine their value after adjusting for “oppressive conduct”.

Appointed referee RisCura Solutions determined a value of just under R78 a share (R700 million) – nearly eight times the R10.36 a share Acsa offered minorities in 2014. In July, government applied to have the 2017 court order rescinded.

Two minorities are now headed back to court seeking an order compelling Acsa and government to buhy their 1.8% shareholding at RisCura’s valuation.

Should the court agree, the other three minorities with 2.4%, may sell, depleting Acsa’s retained earnings by R1.6 billion.

Acsa has opposed the matter, arguing that the RisCura valuation “bears no relation to reality” and paying R700 million from retained income would reduce its equity and reserves.

It argues it would divert money “from serving the public into private hands without proper basis”, says Acsa acting chief financial officer Dirk Kunz in his replying affidavit.

Wits University professor Harvey Wainer, in a supplementary affidavit for Acsa, valued it at R18.1 billion or R36.36 a share (R327 million for minorities).

He said no adjustments for “oppressive conduct” were necessary.

Acsa is 74.6% owned by government, 20% by the Public Investment Corporation (PIC) and the balance by minorities.

Promising a stock exchange listing, government persuaded Aeroporti di Roma (ADR) to acquire 20% of Acsa in 1998 at R8.19 a share. When listing was out, ADR sold its shareholding to the PIC for R16.75 a share.

Minority shareholders argue they’re the victims of oppressive conduct as the promised listing was abandoned.

They accuse the transport minister of using Acsa as a developmental tool in violation of Acsa’s commercial objectives and of neglect in exercising oversight in setting airport tariffs.

The Airports Company Act requires tariffs be set at a level allowing Acsa to make a commercial return, yet they were reduced last year by 35.5%.

Wainer’s valuation is lower than the net asset value in Acsa’s latest financial statements. Minorities will likely argue that, if so, Acsa made a material financial misstatement and should impair its assets by over R2 billion.

“All Acsa directors for the past 10 to 15 years may be guilty of a breach of their fiduciary duties, gross negligence and gross misrepresentations to … stakeholders,” minority shareholder African Harvest’s advisor Alun Frost says.

“Capex [capital expenditure] incurred ... is effectively worthless … and would be categorised as fruitless and wasteful expenditure.

“Those responsible for approving the fruitless and wasteful expenditure would have to be held accountable and potentially liable.”

Referee’s R78 valuation ‘bears no relation to reality’.