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Enter Ketso Gordhan in fierce fight for PPC lead

If you’re new to this saga, you’ve tuned in on just the right day. In studio for CNBC’s PowerLunch we had the opportunity to interview firstly PPC’s CE Bheki Sibaya followed directly thereafter by former CEO Ketso Gordhan. If you’ve had your head under a rock lately then you may not know that there is a fierce battle being waged for the future leadership of this company. December 8th is D-day when shareholders will cast their votes and decide who is to lead the company into the future. We have however just gone to defcon 1. This reads like a Michael Lewis novel, only this time it’s on our shores (…and up into Africa) and not the big apple. Watch this in conjunction with Bheki Sibaya’s interview to get 2 sides of this story.

ALEC HOGG: Well, if you’ve only just joined us here on CNBC Africa, Power Lunch, where have you been? We had Bheki Sibiya a little bit earlier, the PPC [JSE:PPC] Executive Chairman and he left the studio just about the same time that the former Chief Executive, Ketso Gordhan came in. They’re going to be staring each other down on the 8th December. Ketso has got support or sufficient support from shareholders to call a Special General Meeting, at which a vote will be made and, at that vote, either the Board of PPC will be relinquishing their positions or Ketso Gordhan will probably find himself another job.

He’s with us in the studio and I think the point that we really need to focus on here, just for starters, was you have now come out. Every time we’ve spoken and asked you about Tryphosa Ramano, the Chief Financial Officer, you’ve said, ‘no comment’. Yesterday, in your statement, you said that, very specifically that she was putting the funding deal at risk and you wanted to address it and the Board didn’t allow you to. We put the same questions to Bheki Sibiya, who said she’s doing a stellar job and, in fact, you had the wrong kind of reasons for addressing it.

KETSO GORDHAN: No, let me answer by giving one bit of context. Tryphosa was in the business, applied for the job as CEO. When I applied for the job I got the job, and that set up a scenario, typically, in the corporate environment, at that level, she would have left the business but she stayed and, from day one, tried to undermine my authority as CEO and never cooperated with any of the visionary stuff we tried to do in the business.

When I cut my salary and asked the Executives not to take an increase she gave up zero, so from that petty example, all the way through to undermining what was a genuinely lucrative deal, for shareholders, we were going to get $200m. It was going to convert in year six, by which time we would have used that money to make a huge amount of money for current shareholders.

The Chairman can argue about looking at alternatives. That was the best deal in town, after I had talked to pretty much everybody, whether it was bankers or private equity guys or international development finance institutions, we had found the best deal.



ALEC HOGG: What was the hurry though, to make that move?

KETSO GORDHAN: The hurry was basically, two things. One, is our balance sheet was going to be strained, as we continue to implement the deals that were done and we were hoping to close one more deal. We needed to be able to sign a piece of paper saying ‘we have the equity to do the deal, when we commit to our partner, either in Algeria or in the DRC, which were the two places we were looking to do the fifth deal’.

GUGULETHU MFUPHI: This strategy – does it belong to you or the Board?

KETSO GORDHAN: You know what’s interesting about the strategy is that everybody can write a piece of paper, so if you look at South Africa, there’s the National Development Plan, it’s a piece of paper. Now, the only time it becomes a strategy is when somebody implements it and three of the four deals, the Chairman talked very eloquently about were done under my watch. The most significant deal, the biggest one, which in a sense subsumes the other three, is the DRC, and that happened under my watch. The funding was going to happen under my watch. The new deal was going to happen under my watch, so I want to thank him for talking so eloquently, about my work.

ALEC HOGG: But what if you hadn’t been appointed? Are you saying then that these factories would not have gone ahead?

KETSO GORDHAN: I want to assure you that you can ask the Senior Executive Team, at PPC, who’ve worked there for 20 or 30 years, what the difference in energy levels was. When you have a leader with a clear vision, who knows how to inspire people and creates an environment, where everybody feels excited about what we were doing. I think that’s gone, so your question about morale being flat. It is completely flat. The two senior people in the business, the two MDs of the South African and international business are on my team. In fact, the international MD has put his name forward for the new Board, so very clearly, the current Senior Management Team, at PPC, would like to see a Board and the return to the levels of energy and commitment, and passion we had just a few months ago.

ALEC HOGG: Ketso, the share price has dropped from R34.00, at the time of your resignation, to R26.00, (under R26.00 today). There will be some investors saying, ‘well, if you get back in they’re going to be able to buy it cheap’. What chance would you put of your return?

KETSO GORDHAN: Right now, this is an issue, that’s in the hands of shareholder. What I’ve been doing and want to use this opportunity to do once again is to appeal to the shareholders. I’ve given you the real story about my resignation. It goes on about the fact that she had a bigger office, and I’m not that kind of person. It goes about much, more substantial issues. I think we have the possibility…

ALEC HOGG: So she had a bigger office than you?

KETSO GORDHAN: Yes, but that’s not the issue.

GUGULETHU MFUPHI: With a door.

ALEC HOGG: With a door.

KETSO GORDHAN: Exactly, in a company with an ‘open-door’ policy. We have serious value to unlock in PPC. I said to shareholders two months ago, ‘we can double the size of this business’, which means double the share price, double the Ebitda, and double the capacity of cement that we produce. I am very committed to achieving that vision.

ALEC HOGG: But you didn’t answer my question. What would you put the odds at, if you were betting that?

KETSO GORDHAN: I would say I’ve got a 51 percent chance of winning.

GUGULETHU MFUPHI: Maybe that’s all you need, actually.

KETSO GORDHAN: That’s all you need and I think that, for the shareholders out there, who want to extract proper value from this share, and the employees (who I know have already voted) and voted in my favour, so I’m excited about that. Having the employees behind you is always a great thing, so I think it is up to the shareholders to figure out what the right thing to do is. I will abide by whatever decision they make, on the 8th December. If they choose to retain the current Board, I will quietly pack my toys and move onto a new part of my life.

GUGULETHU MFUPHI: Mr. Ketso Gordhan, thank you so much for your time today.

KETSO GORDHAN: Thank you very much.

GUGULETHU MFUPHI: The former chief executive of PPC, Ketso Gordhan.

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