Johannesburg - PPC shareholder Foord Asset Management has increased its stake in the South African cement maker to achieve the 10 percent support required to request a meeting to elect a new board, according to a person familiar with the matter.
During the week ending October 17, Foord bought shares on the open market after an earlier request for a meeting was rejected, the person said yesterday, asking not to be identified as the matter is private.
Cape Town-based Foord will ask for a special shareholders meeting for a second time this week.
The money manager has the support of fellow investor Visio Capital Management, the person said.
PPC, South Africa’s biggest cement maker, is embroiled in a battle between the board and at least two shareholders over the resignation of chief executive Ketso Gordhan last month.
The board is dysfunctional, according to Foord, and is hampering expansion in Africa amid increasing competition in its domestic market.
“Should we receive a competent request for a meeting then we will follow due process,” PPC head of investor relations Azola Lowan said in an e-mailed response to questions.
Carolyn Levin, a money manager and head of research at Foord, declined to comment.
Gordhan resigned on September 22 after less than two years as chief executive, citing differences of opinion with fellow directors over matters including his intention to fire an unidentified senior executive.
He said on September 29 he would return to his post if he had the backing of shareholders.
Foord shares Gordhan’s concerns that the board isn’t capable of carrying out the cement maker’s plans, the person said.
Damage Perception
“This dispute that has gone public for a month now is weighing negatively on the stock’s performance and could potentially damage investors’ perception of PPC as an investment destination,” Andy Gboka, a London-based analyst at Exotix LLP Partners, said in e-mailed comments.
Exotix has a hold recommendation on the shares.
During the five days ended October 17, about 30.4 million shares were traded, or 3.7 times more than the previous week, according to data compiled by Bloomberg.
The shares gained 1.9 percent to 28.65 rand as of 2:32 pm in Johannesburg, valuing the company at 17.4 billion rand.
The stock has fallen about 8.6 percent since Gordhan’s resignation.
If the dispute “lasts for too long, other shareholders may have to step in to end this confusion and defend the long-term value of their participation,” Gboka said.
The Public Investment Corporation, PPC’s biggest investor with about an 11 percent stake, declined to comment.
On September 30, the Pretoria-based fund manager said it was in “total support” of the board and the company’s strategy. - Bloomberg News