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Acsa’s BEE partners head to court

Sep 25 2016 07:51
Erika Gibson

Two of the empowerment partners of Airports Company South Africa are heading to court because they claim the parastatal is holding them “economically hostage”.

They allege Acsa had them purchase shares under false pretenses in 1998 because the company planned to list on the stock exchange and would therefore be largely privatised.

African Harvest Strategic Investments (AHSI) and Up-Front Investments 65, with 1.8% of the total of 4.21% minority shares, are the empowerment partners embarking on legal action.

Since then, Acsa has embarked upon major upgrades at its nine airports throughout South Africa.

They claim that, in the case of the King Shaka International Airport in Durban, Acsa accumulated so much debt that it cannot afford to pay market-related dividends.

Acsa built King Shaka without a viability study being done – according to the company’s auditors. In the 2015/16 financial year, the airport suffered a staggering loss of R1 billion.

The Auditor-General also delivered scathing criticism of the company in his 2015/16 annual report over irregular expenditure of R446 million. A forensic investigation into the irregularities was launched.

However, in the annual report, released on Friday, it appears that Acsa paid merit bonuses to staff and personnel amounting to R165 million, an increase of 47% compared with 2014-2015.

According to Pieter Smit, the attorney representing AHSI and Up-Front, all court documents have now been filed and a date in the South Gauteng High Court in Johannesburg will be finalised before the end of the year.

His clients allege that Acsa’s spending on nonprofitable airports, for which it had to borrow money in the “national interest”, is not in the best interests of its shareholders.

According to the two partners, any possible dividends that might accrue to them are wiped out by Acsa’s business decisions, such as buying 20% of shares in the Guarulhos Airport in Sao Paolo, Brazil.

Last year, the company bought another $93 million (about R1.26 billion) in shares in the run-up to this year’s Olympic Games.

After March this year, Acsa invested another R450 million in the airport.

This was despite a financial valuation report done on instruction of Acsa in January, which determined that its investment in the company was of “nil value”.

The regulatory committee, which determines the tariffs Acsa is allowed to charge airport users, as well as Acsa itself, both resort under Dipuo Peters, the minister of transport.

While Acsa is supposed to be turning a profit, the committee limits the tariffs which, in turn, prevent the shareholders from earning substantial dividends.

According to Smit, his clients now want to compel Acsa to buy back their shares at a reasonable price.

“The minority shareholders borrowed about R180 million to buy the shares and they have to pay those loans back. Between 2008 and 2012, Acsa paid no dividends as a result of the airport upgrades. Since then, [the payouts] have been so insubstantial that my clients cannot afford to pay the loans back.

“In 1998 they paid R8.21 per share. In 2005, Acsa sold further shares at a price of R16.75. Acsa’s only offer to date has been R12.87 per share.”

Smit and his clients presented a memorandum of all their questions at Acsa’s annual general meeting on Friday.

But any questions about King Shaka Airport were rejected by Skhumbuzo Macozoma, the chairman of the board, owing to the pending litigation.

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acsa  |  aviation  |  airports


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