November 11, 2003
By Ann Crotty
Johannesburg - Negotiating a value for the 49 million EC-Hold shares that Eurevest wants to reclaim from MGX is expected to be complicated by the high court action taken by the Securities Regulation Panel (SRP) against MGX and its directors Ronnie Price and Chris Hills.
Price is a former chairman and Hills was a former chief executive of MGX.
In the latest twist in the saga, Eurevest Leasing, a firm controlled by Price, has claimed 49 million EC-Hold shares that were pledged to Eurevest as security for a loan provided to MGX.
As the 49 million shares represent over 35 percent of EC-Hold, Eurevest is obliged to make an offer to minority shareholders.
The official notice to EC-Hold shareholders referred to the fact that Eurevest has "advised that the highest price paid by it or by related parties for EC-Hold shares in the last 90 days was 20c".
This appeared to be an indication to minority shareholders that if Eurevest proceeded with the transaction it would only be offering in the region of 20c a share.
However, in an unusual move the SRP required EC-Hold to remind shareholders of the dispute that dates back to October 1999, when Price and related parties acquired control of EC-Hold without making an offer to minority shareholders.
In March 2002 the SRP ruled that the Price group was obliged to make an offer to the minorities at R2.40 a share. The Price group ignored the ruling and in November 2002 the SRP instituted action in the high court against MGX, Price and Hills.
SRP executive director Richard Connellan said yesterday that the SRP was seeking an order from the court requiring the parties to make the R2.40 cash offer.
He pointed out that any shareholders who sold their shares to Eurevest in terms of the transaction currently under consideration would not lose their right to claim for damages if the court ruled that the Price group had to make the R2.40 a share offer.
The notice to shareholders referred to the court action and noted:
"If it takes its normal course it is unlikely to be determined before at least the end of March 2005."
This is the first time the SRP has taken a matter to court.
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