Johannesburg - Shareholders of Ububele, which is listed on the JSE’s junior AltX exchange and supplies crop protection chemicals and services to farmers, will vote tomorrow on whether or not to remove four of the company’s current directors and appoint three new directors.
The controversial shareholders’ meeting is part of a battle for control of little known Ububele between African Agricultural Fund (AAF) and a company with the provisional name of K2012. K2012 is linked to Rovic & Leers, which supplies farm machinery to farmers in South Africa and many sub-Saharan countries. AAF is a collection of private equity fund vehicles, which is managed by Phatisa and focuses on pan-African food and agricultural investments.
It is believed that both parties are keen to use Ububele as a platform for growth not only in South Africa but in the southern African region.
In its notice to shareholders, the Ububele board, which is opposing the moves by K2012, said it believed that the AAF investment and its network “would add to the existing impetus and grow the Ububele business in line with its recent restructure and revised strategy”.
Eddie de Villiers, a director of K2012, told Business Report that there were potentially “very good synergies between Ububele and Rovic”, adding: “Ububele has depth of talented staff but the managerial overheads are excessive; we know the business well and can add value.” De Villiers, who said that K2012’s 50c a share offer “is imminent”, added that there was currently no offer on the table from either party.
The battle for control follows an Ububele board meeting on May 15, at which it was proposed that AAF would acquire 121.6 million newly issued shares in Ububele for 60c a share. The share acquisition, which was to be done in two tranches, would have resulted in AAF acquiring control of Ububele and would have provided it with much needed funds. AAF undertook to make an offer to minority shareholders once the 35 percent threshold was passed.
Within days of the board meeting, Ububele received a letter from K2012 outlining a potential cash offer to acquire all the shares in the company at a price of 50c a share. At the time K2012 held around 14 percent of Ububele. It has subsequently steadily increased its stake to just over 28 percent.
A week later K2012 filed an application in the High Court to prevent Ububele from issuing shares to AAF without the prior approval of the Takeover Regulation Panel and the shareholders.
In early June, K2012 followed this up with a notice to Ububele requesting it to call a shareholders’ meeting for the purpose of voting off four of the directors and replacing them with three directors nominated by K2102. Two of the directors put forward for removal are independent. Bertie Cloete, the chief executive of Ububele, has said he would resign if the four directors were removed.
De Villiers told Business Report that Cloete’s departure would not be a problem given the depth of talent in staff ranks and the fact that Rovic knew the business so well.
Shares of Ububele were untraded at 44c yesterday. - Business Report