Cape Town - Terry Moolman, the CEO of Caxton and CTP Publishers and Printers [JSE:CAT], has accused significant minority shareholders ElementOne (formerly Johncom) – and its institutional shareholders Allan Gray and Coronation Fund Managers - of seeking to break up the JSE-listed media conglomerate.
This startling allegation is made in court papers filed around an attempt by media investment company ElementOne (which delisted from the JSE at the beginning of 2010) to force Caxton to hand over certain documents.
The court case – which revolves around a request for information in terms of the Promotion Of Access To Information Act - started this week.
These documents pertain to unspecified rights and obligations that ElementOne has as a shareholder in Caxton. In court papers ElementOne director Danie Vlok argued that the company needed access to the documents to ascertain its rights and obligations as a shareholder, as the board had been investigating alternatives to unlock value in ElementOne.
After selling off its stake in media group Johnnic/Avusa to Mvelaphanda Group in 2008, ElementOne holds as its sole investment (other than cash) a direct and indirect 39.3% stake in Caxton.
To date Caxton has declined to hand over the documents in question – some of which date back to 1979.
ElementOne, which has seen various corporate forms (Argus Holdings, OmniMedia, Johncom, Avusa) and numerous board changes over the last three decades, no longer has a record of the documents.
Vlok said the reluctance by Caxton to disclose the records was inexplicable.
He said despite ElementOne's endeavours to reconstruct its corporate history, the company has not been able to obtain sight of any document recording that its direct and indirect interests in Caxton are encumbered by any pre-emptive of similar rights in favour of Caxton.
"Consequently, to the best of ElementOne's knowledge, it should be at liberty to deal with such interests in any manner deemed fit by its board of directors and (in appropriate circumstances) its shareholders.
"However, its ability to do so is called into question by Caxton, on the basis of rights and obligations they allege exist in their favour, arising from documents and records they refuse to provide to ElementOne."
Vlok argued that ElementOne could not negotiate in good faith with potential acquirers of its interest in Caxton without disclosing the assertion of rights in respect of the shares.
"Such disclosure would alert potential acquirers to the need for an appropriate due diligence investigation, a precaution destined to flounder on an absence of documentation of ElementOne’s part and an unwillingness on the part of Caxton to disclose such documents exist."
In an answering affidavit, Moolman – considered by many to be the most street-wise media operator in SA – maintained that the board of ElementOne was seeking to achieve a break up of the Caxton Group. This, he argued, was "for no other purpose than to extract the last available profits from a pre-meditated asset stripping strategy embarked on by Allan Gray and Coronation in 2006".
He denied the impression that ElementOne was justified in wanting to unlock the Caxton Group structure because the arrangement was prejudicial to ElementOne. ElementOne continues to trade on an over-the-counter basis at a significant discount to its underlying investment in Caxton.
Moolman stressed ElementOne's investment in Caxton had always been as a minority shareholder and the value of its investment always subject to a discount.
Moolman also took issue with Vlok’s sugestion around unlocking the value in ElementOne.
"To achieve his ends, Vlok proposes that my partners and I should relinquish control of the Caxton Group, swap all our respective shareholdings in the Caxton Group into ElementOne for a fresh issue of ElementOne shares, and allow Allan Gray and Coronation to complete their asset strip of ElementOne at the expense of the current controlling shareholders."
In a replying affidavit, Vlok dismissed Moolman's arguments around ElelmentOne as "harbouring Machiavellian intentions" for withholding the documentation.
Vlok stressed it was ElementOne's intention to exit the Caxton Group and not "break up" the control structure.
Full transcripts of the various affidavits and request for information in terms of the Promotion Of Access To Information Act is available on www.elementone.co.za.
- Fin24.com
This startling allegation is made in court papers filed around an attempt by media investment company ElementOne (which delisted from the JSE at the beginning of 2010) to force Caxton to hand over certain documents.
The court case – which revolves around a request for information in terms of the Promotion Of Access To Information Act - started this week.
These documents pertain to unspecified rights and obligations that ElementOne has as a shareholder in Caxton. In court papers ElementOne director Danie Vlok argued that the company needed access to the documents to ascertain its rights and obligations as a shareholder, as the board had been investigating alternatives to unlock value in ElementOne.
After selling off its stake in media group Johnnic/Avusa to Mvelaphanda Group in 2008, ElementOne holds as its sole investment (other than cash) a direct and indirect 39.3% stake in Caxton.
To date Caxton has declined to hand over the documents in question – some of which date back to 1979.
ElementOne, which has seen various corporate forms (Argus Holdings, OmniMedia, Johncom, Avusa) and numerous board changes over the last three decades, no longer has a record of the documents.
Vlok said the reluctance by Caxton to disclose the records was inexplicable.
He said despite ElementOne's endeavours to reconstruct its corporate history, the company has not been able to obtain sight of any document recording that its direct and indirect interests in Caxton are encumbered by any pre-emptive of similar rights in favour of Caxton.
"Consequently, to the best of ElementOne's knowledge, it should be at liberty to deal with such interests in any manner deemed fit by its board of directors and (in appropriate circumstances) its shareholders.
"However, its ability to do so is called into question by Caxton, on the basis of rights and obligations they allege exist in their favour, arising from documents and records they refuse to provide to ElementOne."
Vlok argued that ElementOne could not negotiate in good faith with potential acquirers of its interest in Caxton without disclosing the assertion of rights in respect of the shares.
"Such disclosure would alert potential acquirers to the need for an appropriate due diligence investigation, a precaution destined to flounder on an absence of documentation of ElementOne’s part and an unwillingness on the part of Caxton to disclose such documents exist."
In an answering affidavit, Moolman – considered by many to be the most street-wise media operator in SA – maintained that the board of ElementOne was seeking to achieve a break up of the Caxton Group. This, he argued, was "for no other purpose than to extract the last available profits from a pre-meditated asset stripping strategy embarked on by Allan Gray and Coronation in 2006".
He denied the impression that ElementOne was justified in wanting to unlock the Caxton Group structure because the arrangement was prejudicial to ElementOne. ElementOne continues to trade on an over-the-counter basis at a significant discount to its underlying investment in Caxton.
Moolman stressed ElementOne's investment in Caxton had always been as a minority shareholder and the value of its investment always subject to a discount.
Moolman also took issue with Vlok’s sugestion around unlocking the value in ElementOne.
"To achieve his ends, Vlok proposes that my partners and I should relinquish control of the Caxton Group, swap all our respective shareholdings in the Caxton Group into ElementOne for a fresh issue of ElementOne shares, and allow Allan Gray and Coronation to complete their asset strip of ElementOne at the expense of the current controlling shareholders."
In a replying affidavit, Vlok dismissed Moolman's arguments around ElelmentOne as "harbouring Machiavellian intentions" for withholding the documentation.
Vlok stressed it was ElementOne's intention to exit the Caxton Group and not "break up" the control structure.
Full transcripts of the various affidavits and request for information in terms of the Promotion Of Access To Information Act is available on www.elementone.co.za.
- Fin24.com