Johannesburg - The Comair board is not aware that either Atul Gupta or Ronnie Ntuli has any intention of resigning as non-executive directors of the airline following the sale on Monday by both Gupta and Ntuli of all of their Comair shares.
Comair chief executive Erik Venter also said that the sale by Ntuli had no impact on the company’s black economic empowerment agreement with Thelo Consortium. Ntuli is a member of the Thelo Consortium, which holds 74 million Comair “A” shares. These “A” shares are unlisted. Venter said that the consortium would see a potential “earn out” on these shares next year based on the Comair share price.
Business Report was unable to contact either Gupta or Ntuli for comment on their share transactions but one analyst remarked that the abrupt manner in which it was done suggested either unexpected urgency by the sellers or some hostility towards the company.
On Monday afternoon, just hours after receiving authorisation from the Comair company secretary, Gupta sold his entire holding of 22.8 million Comair shares at R3 each in a transaction valued at just over R68 million.
Shortly afterwards, Ntuli sold his 5.8 million shares at the same price in a transaction valued at R17.3 million.
Yesterday Comair leapt 14c, or 4.73 percent, to close at a 12-month high of R3.10.
The high volume of trade on Monday was in sharp contrast to the normal pattern of trade in Comair shares. During financial 2013, only 38 million shares were traded; in 2012 about 48 million shares were traded.
Monday’s unexpected trading was made even more complicated by Comair’s decision, taken a few hours after the sales, to repurchase all of the shares sold by Gutpa and Ntuli.
This was the company’s first ever share buyback. Questioned about the timing of the buyback, Venter said that the company had wanted to buy back shares for some time but that there was never any stock available.
“The share is on a p:e [price earnings ratio] of just six times; our earnings have recovered and we’re sitting with surplus cash,” Venter said, adding that a buyback was the best option for shareholders.
He explained that the sale by Ntuli and Gupta provided the ideal opportunity but because it had been unexpected it took a few hours before the company could implement the repurchase.
Venter said that there had been no discussions between the two directors and the board about any plans to resign and that the company was only notified at midday on Monday about their intentions to sell.
“At that stage we thought it might be a few weeks before they sold.”
The sale of the shares not only took the market and the company by surprise but also sparked a brief spat between Comair and its sponsor RMB over who was responsible for an initial Stock Exchange News Service announcement stating incorrectly that Gupta and Ntuli had bought shares.
That error was rectified within hours and a second announcement was issued stating that the transactions had been share sales and not purchases. - Business Report