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With PSG holding 60% of TBBH, minorities had little chance. TBBH's share price gained 16% to 14c/share on the eve of the shareholders' meeting in Rosebank, Johannesburg.
Irate minorities are now threatening to take legal action against the previous owners over what they deem the most blatant example of mismanagement in the history of SA banking.
TBB was founded in 1996 by Piet Liebenberg. Based on his entrepreneurial track record, notably at Finansbank, many people invested.
Some blame Willie Boshoff's team, claiming the bank's problems started only after Liebenberg left. And PSG is said to have got involved based on a net asset value of about 450c/share for TBB.
The 5c/share payout serves as an indication of the extent of the mismanagement PSG encountered at TBB. But minority shareholders PSG's involvement enabled it to acquire a banking licence for a small outlay and the asset dilution will eventually benefit TBB.
The approval issue, expected to be a mere formality, took the whole day. Lionel Richardson, known for his litigation, led the questioning of TBB's current management. He wanted to know how it was possible for the bank's assets to evaporate so quickly and why loans were granted without security. He also wanted to know whether borrowers' risks were analysed adequately.
There were no clear-cut answers, the meeting concluded. PSG pleaded ignorance, claiming that the extent of the problems became clear only at a late stage and that the previous management was to blame for this. But PSG came under fire for paying R10m for TBB without first conducting a due diligence.
The previous management did not attend, though it had been rumoured that Liebenberg would personally defend himself û an unlikely proposition since he maintains a low profile these days.
Once the extent of the problems became clear, some assets were sold in haste. Minorities now say these disposals were out of order.
TBBH now has two businesses: finance house Axial and Immorent, a business registered in Germany with interests mainly in property. Minorities argued that the assets and prospects of these two businesses justified a bigger payout.
It's not clear what form the planned litigation will take û whether it will be intended to scare the previous management or will merely be a symbolic act of opposition. Whatever the case, TBB is thought to deserve censure for its management.
In their defence, it could be said that economic circumstances worked against the bank and Liebenberg and company shouldn't be taken to task for trying. Still, his flock of supporters now have to pay the price and they're not keen to see PSG gain where they've lost û though they now may have to live with the hard lesson that nothing is sacrosanct in a capitalist system where risk is an integral element.
