RCL not chick­en­ing out

CEO’s shares sold be­cause they have ma­tured and not be­cause of panic

The Sunday Independent - - Business Report - Sandile Mchunu

RCL FOOD has played down the sale of shares by its chief ex­ec­u­tive, Miles Dally, in the past few days as not in­dica­tive of panic in the lis­te­rio­sis-hit con­sumer goods and milling com­pany.

Stephen Heath, the com­pany’s di­rec­tor of le­gal and cor­po­rate af­fairs, said the sale was part of a block of shares al­lo­cated to Dally in terms of RCL Foods’ share ap­pre­ci­a­tion rights scheme, which had ma­tured.

Heath said Dally had re­tained a por­tion of his share al­lo­ca­tion and had sold some to pay the tax­a­tion on the share al­lo­ca­tion and set­tle other com­mit­ments.

“The shares have to be taken up within seven years and are due to ex­pire in the next year. Shares can only be traded when there is not a closed pe­riod as is the sit­u­a­tion at the mo­ment, so this is a rare op­por­tu­nity for these trades to take place,” Heath said.

“He con­tin­ues to hold more than 1.2 mil­lion RCL Foods shares, which he has owned for many years.”

On Fri­day, re­ports emerged that Dally had sold his shares for a com­bined amount of R3.17 mil­lion.

The re­ports claimed that Dally had off­loaded 175 856 shares in less than two weeks.

Last month RCL, which owns Rain­bow Chicken, was hit by a crip­pling health scan­dal rooted in the lis­te­rio­sis out­break.

The com­pany’s share price took a tum­ble as it is­sued a prod­uct re­call and sus­pended all pro­duc­tion from its en­tire cus­tomer base over the out­break, in­cur­ring losses es­ti­mated at nearly R75m.

It said the in­di­rect im­pact of the out­break was dif­fi­cult to de­ter­mine or quan­tify, but man­age­ment es­ti­mated the profit im­pact to be ap­prox­i­mately R20m a month.

Its man­age­ment was ac­tively en­gag­ing the govern­ment all the time in or­der to re­sume op­er­a­tions at the Wol­we­hoek pro­cess­ing plant.

Af­ter some days, Min­is­ter of Health Dr Aaron Mot­soaledi con­firmed ST6 as the cause of South Africa’s lis­te­rio­sis out­break.

The group said the min­is­ter had also em­pha­sised that Rain­bow polony did not con­tain ST6.

“Even so, Rain­bow re­called all polony prod­ucts in the in­ter­est of pub­lic safety,” the group said.

Rain­bow Vi­en­nas, Rus­sians and other ready-to-eat Rain­bow prod­ucts have not been part of the De­part­ment of Health’s pre­cau­tion­ary re­call.

The de­part­ment con­cluded that the source of the out­break of lis­te­rio­sis was from a pro­duc­tion fa­cil­ity in Polok­wane, owned by En­ter­prise.

Wayne McCur­rie, a fund man­ager at Ash­bur­ton In­vest­ments, said it was nor­mal for di­rec­tors to cash in on the shares when a share ap­pre­ci­a­tion rights scheme had ma­tured.

“There is noth­ing wrong when a di­rec­tor sells when the shares have ma­tured,” McCur­rie ex­plained.

Dally sold 175 856 shares at a price of R18 a share between March 29 and April 10.

The share price was flat on the JSE on Fri­day, at R18.99 a share.

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