| Fri 6 Aug 2004, 9:52 | | Putco determined to get empowered despite setback |
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Putco determined to get empowered despite setback
August 6, 2004
By Roy Cokayne
Pretoria - Putco, the listed passenger transport company, has expressed its determination to become empowered, despite receiving insufficient support from shareholders for its proposed black economic empowerment (BEE) transaction.
Franco Pisapia, Putco`s deputy managing director, admitted the impact of the no vote by shareholders on Tuesday was a setback.
Pisapia said the company would reflect on what had happened, regroup and consider the way forward, but it was determined to become empowered.
`Institutional investors will have to take note of that if we [Putco] are to become an empowered company. They need to make compromises because no empowerment deal happens without compromises.`
His comments follow the special meeting, at which shareholders holding about 70 percent of the company`s shares voted in favour of the proposed scheme of arrangement related to its envisaged BEE transaction with Safika Holdings and the Disability Empowerment Concerns (DEC).
However, this fell short of the 75 percent support required to approve the scheme.
For the deal, Putco had made an offer to buy back 26.4 million shares from its shareholders and delist the company to facilitate Safika and the DEC acquiring in excess 50 percent in Putco.
Pisapia said shareholders representing about 89 percent of Putco`s shareholding had voted, but institutional investors were opposed to the scheme.
Putco received `a small amount of support from certain institutions`, but Pisapia was not prepared to name the institutions opposed to the scheme. `It would not be fair on them to do that.`
Some institutions obviously grouped together and opposed the scheme primarily because they wanted to remain invested in the company and for it to remain listed, but certain of the scheme conditions were `too onerous for them to do that`.
These conditions were related to the guarantees shareholders had to provide for the suretyship provided by Carleo Enterprises, Putco`s controlling shareholder, to Investec for a loan to implement the scheme, Pisapia said.
Mike Oldham, Putco`s managing director, previously warned that any delay or rejection of the proposed BEE scheme would have serious implications for the future and would place significant pressure on negotiations with the transport department on current and potential government and commercial contracts.
Enyinna Nkem, the Democratic Alliance`s spokesperson on trade and industry, claimed the Putco share transfer deal rejected by shareholders exposed the perverse conditions the government had put in place to encourage BEE.
`The deal would have seen 28 percent of the business handed to Saki Macozoma`s company [Safika] at a 96 percent discount and could in no way have be regarded as broad based,` he said.
Nkem said the problem was that the transfer of ownership to clearly `advantaged` individuals was regarded as broad-based BEE in terms of the government`s minimum scorecard ratings.
If the deal had been structured as an employee share ownership scheme to benefit the 4 000 Putco employees, most of whom are black, it would have been truly broad based, he said.
Putco closed 10c up at R6.30 yesterday. The transport sector improved 0.49 percent.
