| Mon 3 Jul 2006, 10:31 | | BEE hitch may cost Johncom CEO his job |
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BEE hitch may cost Johncom CEO his job
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Media groups lag mining and financial sectors in sealing empowerment deals
IT IS high noon for Johncom CEO Connie Molusi tomorrow as he decides whether to accept an ultimatum to voluntarily leave the company, writes Mathabo le Roux.
Molusi has had several run-ins with Johncom chairman Mashudu Ramano over the companyÆs empowerment strategy.
Media reports yesterday said that Molusi faced possible dismissal over an alleged attempt to block an empowerment deal involving Cyril Ramaphosa, Patrice Motsepe and Tokyo Sexwale, which would see Johncom merging activities with media counterpart Caxton, and Caxton CE Terry Moolman taking charge of the new merged entity.
Neither Molusi nor Ramano would comment on the reports yesterday, but Moolman is understood to have been angered at delays by Johncom management in moving their printing to Caxton from Independent Newspapers.
A long-term printing contract between Johncom and Independent expired last March but is being rolled over.
MolusiÆs strained relations with Ramano will have weakened his position should Ramano have decided to side with Moolman over the printing contracts.
Well-placed Johncom insiders said yesterday it was likely Molusi would go.
ôOnce your employer says he does not like you, you will have to go. He can go to court if he wishes, but then the battle can only get messy,ö said one.
ôThey have made their call and they look like they will go ahead despite protestations,ö the source said.
It is understood Ramano wrote to Molusi last week suggesting the CEO might be suspended if he did not resign.
The letter is understood to have questioned MolusiÆs stewardship of the company.
Market speculation about Caxton, owner of the daily newspaper Citizen, making overtures for Johncom has been rife for some time. Caxton wants JohncomÆs huge printing contracts, which would include the Sunday Times, Sowetan and Business Day. Johncom owns half of Business DayÆs publisher, BDFM.
Analysts were suggesting yesterday that Johncom and Caxton would merge, though Caxton, with a market capitalisation of R7,4bn, has cash reserves of close to R1bn, and authority to sell more shares if needed to fund acquisitions or grow the company.
Caxton shareholders gave the go-ahead a year ago for a 100% increase in the groupÆs authorised share capital, from 600-million to 1,2-billion shares. If the shares are used as currency for corporate action, the company would have a war chest of about R8bn, including its cash resources.
Indicators point strongly to Caxton chief MoolmanÆs involvement in the transaction. A media stocks analyst thought a merger between the two could create a ôformidable media groupö. He did not think a deal was close to being announced, though.
ôThere is still too much to tie up. I donÆt see them clinching it this year.ö
He said, however, that he would be concerned if a management shake-up meant Molusi and his right-hand man, deputy CE Prakash Desai, were pushed out.
The company has posted a sterling performance since Molusi took over the reins five years ago, with the share price quadrupling its value over this period.
On Friday, the groupÆs market capitalisation was at R5,8bn.
Another analyst said the companies shared similar strategies, with both having stated their intentions to enter the radio space, where empowerment credentials are a necessity.
Molusi was apparently offered a package of R15m ù R10m in cash and R5m in share options ù to leave the company voluntarily, but he refused.
It is understood that the Johncom board is meeting tomorrow and Molusi may then get his marching orders.
Johncom, which lost its empowerment status last year when holding company Johnnic unbundled its stake in the company in March, has been working on an empowerment deal for quite some time now. The companyÆs black shareholding is under 10%.
A merger with Caxton, which has no empowerment shareholding, would dilute the black shareholding even further.
Black business heavyweights Ramaphosa, Sexwale and Motsepe were reported to be interested in taking a 35% stake, worth more than R1,5bn, in Johncom.
