BEE tackled on a grand scale
Cape Town - After some heated debate at a shareholders' meeting on Sunday, empowerment company Grand Parade Investments (GPI)* passed resolutions to facilitate a new broad based empowerment scheme.
GPI, which holds a significant minority stake in SunWest (the owner of the GrandWest casino complex), has hinted strongly at listing on the JSE in the short term.
The scheme, which aims to entrench long term BEE credentials at GPI, was subject to a last minute court challenge by shareholders San Cino and Blue Bay Asset Management on Friday.
Both San Cino and Blue Bay wanted to stop Sunday's meeting, but the parties agreed to allow the meeting to proceed pending further discussions on the BEE proposals.
The meeting - attended by over 1 000 shareholders - saw the posting of 55 million votes by eager participants, with about 70% supporting the resolutions. Clearly GPI - with a strong Cape community base - is not a company suffering from shareholder apathy.
The meeting lasted more than three hours with many shareholders joining in vocally in the meeting. The meeting had to be called to order several times with shareholders determined to make themselves heard on various matters.
Discount
Shareholders were also entertained by sarcastic (and sometimes personal exchanges) between GPI directors Hassan Adams (chairperson) and Ragi Moonsamy (who represents San Cino on the GPI board).
The thrust of the empowerment proposals will see GPI issuing 12.6 million new shares for cash to new black corporate investors (including former director of Public Prosecutions Bulelani Ngcuka, CET, the Steve Biko Foundation, new non black corporate investors (Alpha Capital and Trematon) and a GPI broad based black empowerment trust (comprising qualified existing shareholders).
While the new investors are issued shares at 650c/share the existing GPI shareholders in the BBBEE vehicle will receive new shares at a discounted 400c/share.
Proceeds from the share issue will be used to bring GPI's stake in SunWest from 19% nearer to its stated goal of 30%. Only shareholders deemed to be "black people" or "black enterprises" will be allowed to participate in the BBBEE share issue.
GPI chairperson Hassan Adams stressed that maintaining GPI's BEE status was essential in terms of Sun International's exclusive gaming licence in the Western Cape.
There are growing perceptions that GPI has been "infiltrated" by white investors and institutions wanting a slice of the lucrative Grandwest casino. Blue Bay purportedly controls between 2.8% to 5% of GPI, while Sanlam (which controls more than 50% of San Cino) effectively holds another 6.5% of GPI.
Burial of empowerment
On principle San Cino - with what is largely perceived as a white institution as a majority shareholder - would not be deemed a "black enterprise", which would preclude its participation in the empowerment share offer.
Much like what has transpired at Real Africa Holdings, the institutional dominance at San Cino has raised questions about genuine empowerment credentials.
Adams said, however, GPI was still open to discussions with San Cino.
Addressing the shareholders, GPI and San Cino director Ragi Moonsamy argued that GPI's empowerment effort was tantamount to a memorial service at the burial of empowerment.
He reckoned the empowerment share issue would dilute existing shareholders and claimed there was sufficient doubt surrounding the exercise to oppose the matter.
Moonsamy asked why GPI was insisting on issuing new shares as low as 400c when indications were that the company could trade between 1200c to 1500c on listing.
Adams remained firm on the empowerment issue. "We are not diluting you (existing shareholders)...we are diluting Blue Bay. You can shoot me down for this, but I will never allow a white man to steal from us again."
For more detail on developments at GPI please see next week's Finweek. You can also subscribe online.
*The writer holds shares in GPI
News source: www.news24.co.za
Posted by: www.SouthAfrica-CarHire.com
