Holders put Johnnic to the test

In the morning during HCI's meeting, there was little shareholder interest in the proceedings with shareholders adopting all resolutions put forward to them. However, it was a different scenario with Johnnic's meeting as shareholders were asking probing questions about the company's future.

HCI owns 51% of Johnnic and the two companies have the same directors sitting on their boards. For example Marcel Golding is the chairperson of both HCI and Johnnic. This can be easily seen as a conflict of interest.

One Johnnic shareholder felt that their needs are compromised in favour of HCI. The shareholder claimed that they were asked to surrender their Johnnic shares by selling to HCI.

"Yes, it is true that HCI was interested in buying the remaining 49% of Johnnic but Johnnic shareholders refused the offer. Right now we have moved on with other businesses but the move might be considered in the future.

"There are no specific plans right now to acquire Johnnic," said Golding.

The interesting point at Johnnic's AGM was the withdrawal of resolution 6 before the start of the meeting. This resolution deals with the issuing of new shares for cash. No explanation was given for the withdrawal but shareholders can look at another special resolution (no. 8) that was passed as a reason for the withdrawal.

That resolution allows the company to buy back no more than 20% of the company's issued share capital at a premium of maximum 10% a share. It seems reasonable to presume that the company has not identified any opportunities in which to utilise its spare cash.

There was also resistance by some shareholders on resolution 5 about the placement of unissued shares under the direct control of directors. Sixty four percent voted in favour of the resolution whilst 32% voted against with 4% abstaining.

All other resolutions were adopted and by more than 99% majority vote with no objections from the shareholders.

Fin24 wanted to ask questions about the future of both companies but was told by the chairperson to wait until the middle of next month as both companies were in a closed period at this stage.

One of the pressing issues for Fin24 is the decrease in size of the deposits and cash in the balance sheet of Johnnic in the current financial year which is at R48.3m, down from R373.2m in 2006.

Group CEO Andre van der Veen also agreed by declaring, "The group doesn't have much cash available as it used all the cash."

Van der Veen was responding to a question from one of the shareholders who asked why the company is not acquiring more of South African companies instead of buying a US company with their economy not doing well at this stage.

- Fin24