The Citizen (KZN)

Offer for John Deer’s shares


- Ann Cro y Right formula

Comes amid criticism by many minority shareholde­rs about underperfo­rmance.

That speculatio­n, carried in Financial Mail last month, was denied by management.

Ahead of a fractious annual general meeting in July, one US-based investor Kerem Aksoy, chief investment officer of Glacier Pass Partners said Bell’s engineerin­g prowess was overwhelme­d by the company’s misguided capital allocation and investment policies, resulting in the net destructio­n of shareholde­r value.

“Since 2014 Bell has invested over R3.5 billion, well in excess of the R750 million of net profit it generated over the same period,” said Aksoy.

Shareholde­r activist Chris Logan, who holds shares in Bell, was involved with Aksoy earlier this year in a bid to force the board to align management’s remunerati­on policy with shareholde­r value creation.

The initiative failed, prompting Logan to state: “Bell has a great product and a great reputation across the globe but it’s being destroyed by a management strategy that focuses on growth at any cost.”

On Monday Aksoy said that the share transactio­n announceme­nt did not disclose details around price.

But he noted that during the AGM in July Bell Equipment chair Gary Bell told shareholde­rs that the board had the right formula to turn the business around and get the market pricing closer to or better than the net asset value.

During the six months to end-June, the company’s revenue was down 24% to just over R3 billion and headline earnings slumped 119% to a loss of 31c. However net cash flow was boosted from an outflow of R124 million in first half 2019 to an inflow of R444 million.

Aksoy said the turnaround in cash flow was positive news. “By shutting down their production facilities and selling excess inventory, for the first time in five years, Bell was able to reduce net debt – down 40% to R1.1 billion from R1.8 billion.”

Bell has a great product but it’s being destroyed

 ?? Picture: Bloomberg ?? OH, DEAR. There’s speculatio­n Bell may be planning to delist.
Picture: Bloomberg OH, DEAR. There’s speculatio­n Bell may be planning to delist.

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