ElementOne denies Caxton claims
Johannesburg - Investment holding group ElementOne, which owns directly and indirectly 39.3% in Caxton and CTP Publishers & Printers [JSE:CAT], on Tuesday denied allegations of asset stripping made by the publishing group, according to an answering affidavit posted on its website.
ElementOne filed court papers against Caxton in the South Gauteng High Court in January, seeking access to information.
A court hearing involving both ElementOne and Caxton took place on September 15.
In its legal bid, ElementOne wants access to documents to determine what its rights and obligations are in Caxton, through its indirect shareholding in other unlisted companies.
ElementOne said in its founding affidavit, published on its website, that access to these documents would allow it to unlock shareholder value and "realise the underlying value of its shareholding in Caxton".
Earlier, Caxton said in its answering affidavit that ElementOne and two shareholders - Allan Gray and Coronation - are on a "fishing expedition" to break up the control structure of Caxton and strip its assets.
ElementOne describes Caxton's claims as "inaccurate, irrelevant and mostly hearsay allegations".
ElementOne said it is in the process of disposing of its assets and want to transfer its interests in Caxton, not to "break up" its "current control structure".
"Its rights and obligations as a shareholder are prescribed by terms and conditions of the records sought in this application," ElementOne said in the founding affidavit.
Caxton countered that ElementOne's court papers are not "a bona fide application for documents that are required for the exercise or protection of any rights for the applicant (ElementOne)".
"Rather, this application is in reality part of a concerted effort by Allan Gray and Coronation ... to complete the asset stripping of ElementOne/Argus for short-term gains," Caxton said.
ElementOne CEO Danie Vlok said the judge had given the parties two weeks - from September 14 to September 28 - to reach a settlement.
The basis of delivering sustainable returns to investors resides in the strength and sustainability of the underlying investment. Terry Moolman must be commended for defending Caxton and the interests of its clients, shareholders and staff against institutional investors who chase returns at any and all cost which simply translates into short term gain for a minority and long term loss for the majority of stakeholders. There is also the downstream impact of this on average South Africans who rely on a strong media industry to continually invest and improve on editorial coverage and analysis of issues affecting our society.
Fair enough Mr Jacobs but ElementOne have their own rights in this regard which need to be upheld. Were I an investor in any organisation that was withholding information to which I am legally entitled, I would be pretty upset.
Should ElementOne want to break up the company, that is their right and if Moolman's argument is good enough, he should be able to convince the other shareholders to agree with him.
This fight should be fought in the spirit of entrepreneurship and let the best economic pursuit win.
I'm also at a loss to understand why the media industry will suffer through ElementOne having access to this information?
The foundation of Moolman's argument is that ElementOne already has the information both in its possession and within its corporate memory and application forms part of a broader strategy by ElementOne to gain any information which may assist in their quest to "break up the group" and "strip assets". A similar exercise with the then Argus reduced the once proud company to a mere shadow of its former self. Herein lies my argument regarding the downstream impact on the media industry. I think its self explanatory.
On the issue of "value unlocking" or "asset stripping" as Moolman believes is the case, Caxton as a group is worth more than the sum of its parts and not the other way round. We have seen how the ruthless pursuit of profits can undermine even the strongest of economies. Fund managers must be held accountable. Reckless asset stripping exercises comes at a cost to investors in moderate and conservative portfolios yet fund managers continue to benchmark their performance providing astronomical returns to a relatively small number of investors. Win or lose fund managers make a killing, but at what cost?
I dont follow Terry logic, How can a minority shareholder asset strip a company? Surely a shareholders agreement only binds the parties and not other shareholders.