| Tue 17 Aug 2004, 12:21 | | IST minorities revolt at offer, delisting |
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IST minorities revolt at offer, delisting
August 17, 2004
By Roy Cokayne
Pretoria - Minority shareholders in IST, the listed engineering technology group that is developing the pebble bed modular reactor, are in revolt at the planned delisting and offer price to investors by a consortium led by Ethos Private Equity that wants to acquire the company`s entire shareholding.
Francois du Plessis, a stockbroker at PSG Online, who was appointed chairman of a minority shareholders steering committee last week, said it intended to try to block the scheme and proposed delisting.
`It is still early days, but our initial estimates are that we represent minority shareholders with anything between 35 million and 45 million IST shares.
We need 25 percent of the 143.5 million issued shares in IST [to block the scheme],` he said.
Peter Flack from FRM, which in a joint venture with Coronation several years ago turned around IST fortunes, said the R1.80 a share offer price was not just low but `ridiculous, unfair and unreasonable`.
He holds almost 2 million shares in IST.
`We are going to do everything in our power so that Ethos does not steal the company from us.
What we would like to do is stay [invested] in the company and see it remain listed.
`Alternatively, if we cannot achieve that, they must pay us a fair and reasonable price.`
This follows IST last month advising shareholders that the consortium had made an offer to acquire IST`s entire shareholding and delist the firm.
The consortium, which to date has only made an informal offer of R1.80 a share, comprises certain members of IST`s management, Ethos Private Equity Fund IV and Ethos Technology Fund I, Alastair Moffat, Lindsay Robertson and black economic empowerment firm ICT Investments.
Du Plessis said the committee sympathised with the position of IST`s management because of Sanlam Investment Managers` announcement that it was to sell its 48 percent stake and IST`s need for an equity partner.
But the current share price did not represent IST`s potential and the earnings potential of the pebble bed modular reactor project.
`We do not want to lose that position,` he said.
IST Nuclear, part of the IST group, was awarded a R260 million contract in August last year for the detailed design of three key systems for the reactor demonstration plant, which was expected to be completed by mid-2010.
However, there have been continued funding delays at the PBMR company, which resulted in only R19 million of the contract amount coming through to IST by the end of last year.
Brendon Hubbard, a portfolio manager at Investec Securities and a member of the steering committee, described the offer as `cheeky`, adding that it was generally opposed to it.
He was `very confident` and believed they had the right number of shares to block the scheme.
David Sylvester, the chairman of the Shareholders` Association of SA, said minority shareholders were flexing their muscles much more but needed `institutions to take up the charge` if they were going to be successful.
`Black economic empowerment is a requirement of the South African business scene and nobody would disagree with that.
`But to use empowerment as an excuse and jettison minority shareholders is difficult, morally or otherwise, to justify.
To give it as a key reason is salacious and disingenuous,` he said.
IST shares lost 3c to close at R1.82 on the JSE yesterday while the electronic and electrical equipment sector appreciated 0.69 percent.
