MGX investors yet to scrutinise MGX and EC-Hold
--------------------------------------------------------------------------------
Shareholders want an in-depth probe
Information Technology Editor
QUESTIONS about the quality of corporate governance within MGX and its subsidiary EC-Hold were put on hold yesterday, but shareholders say they are not backing down in the battle to get to the bottom of various dealings within the companies.
Investors headed by Cycad Financial Holdings and Peregrine want a thorough forensic audit of transactions between MGX and its 90%-owned subsidiary, ECHold.
Yesterday an extraordinary general meeting was held where shareholders had intended to propose that PricewaterhouseCoopers be appointed to conduct an in-depth investigation.
They had also planned to call for full details of loans made between EC-Hold and MGX, and for permission to instigate further proceedings against MGX and against EC-Hold directors relating to the use of surplus funds.
EC-Hold's board had offered to make the requested information available to all shareholders and opposed the convening of a special meeting, but the shareholders had insisted.
Yesterday, however, it was adjourned for two weeks at the request of Cycad CEO Leonard Fine. He said discussions were taking place between the shareholders who called the meeting and other EC-Hold shareholders, and more time was needed to finalise their mandate.
Postponing the confrontation was not a sign that minority shareholders were giving up their fight, he said.
"We have only just begun. We will do whatever is necessary and use whatever means are at our disposal to deal with this situation.
"If there had been proper governance then we wouldn't have to go through this process."
Cycad's main concern is that MGX has repeatedly flouted an order by the Securities Regulation Panel to raise the amount it will pay to buy out minority shareholders in EC-Hold.
The panel ruled that MGX had to raise its offer from 100c to 240c, after finding MGX guilty of concert party action to quietly buy EC-Hold shares at higher prices before announcing a takeover.
But debt-ridden MGX has constantly dodged the payment, leaving the minorities waiting for their cash.
Cycad has also lodged a case with the panel and the JSE Securities Exchange SA complaining that MGX sold a division of EC-Hold even though EC-Hold is a separate company with its own shareholders.
"Our objective is to ensure proper governance and transparency in ECHold, and our ultimate objective is to ensure the implementation of the panel's ruling and realise value for our shareholders," said Fine.
"This has been a lengthy process with a lot of technicalities being thrown up. The company is in trouble which makes it more difficult, but we want to procure what we believe is due to us."
The board of MGX has been extensively overhauled since its dire financial position first became apparent.
EC-Hold's board now has two members due to its partial merger into MGX, falling short of corporate governance requirements.
Aug 29 2003 10:21:57:000AM Lesley Stones Business Day 1st Edition
Friday
29 August 2003
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
