Johannesburg - The plan of New Africa Capital (NAC) to purchase the 36.3 million NAC shares held by New Africa Investments Limited (Nail) would generate a profit of R38 million for Capricorn, which is controlled by Hollard.
In terms of an arrangement between the members of the Tiso consortium, Hollard would secure the profit by acting as an unnecessary go-between in a straightforward transaction.
Details of the planned purchase, which were published last week, are part of a series of special arrangements that are central to the controversial proposal by the Tiso consortium to acquire Nail.
In October the Tiso consortium, which includes Tiso, Safika, Investec, Hollard and Mineworkers' Investment Company, announced that as part of the planned acquisition it had entered into "certain arrangements" with Phaphama.
Phaphama, which comprises Wiphold, Safika and Hollard, is Nail's controlling shareholder.
Most of the arrangements involved the allocation of Nail's assets to consortium members.
However, a spokesperson for Capricorn said yesterday it was now "highly unlikely" that the planned transaction between Capricorn and NAC would take place, because of movements in the share price of NAC.
The Securities Regulation Panel (SRP) has ruled against implementation of the special arrangements, which require the approval of the Nail board, on the grounds that the arrangements contravene Rule 13 of the Securities Regulation Code.
This prohibits the use of arrangements that ensure favourable conditions for some, but not all, shareholders in a transaction.
In its ruling on Tiso consortium's proposed transaction, the SRP described the special arrangements as inducements and said it would give the necessary consent to the deal only if an amount equivalent to the highest inducement was offered to all the Nail shareholders who accepted the Tiso offer.
The Tiso consortium responded that if this was the final ruling on the subject it would declare all the special arrangements null and void. It has appealed against the ruling.
In terms of the proposal announced last week, Nail would sell its NAC shares to Capricorn at R5.65 a share. If the Nail board does not approve this transaction, then Nail will distribute its NAC shares to the Nail shareholders.
The members of the Tiso consortium, who own more than 90 percent of Nail, will then sell the NAC shares to Capricorn at a price of R5.65 a share.
NAC has an agreement with Capricorn to buy these shares at R6.70. Capricorn would thus earn a risk-free profit of R38 million.
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