Shareholder activist Harry Smit, who has a long history of protecting the rights of minority shareholders, this week raised the red flag on Ascendis Health’s plan to hold an extraordinary general meeting on January 18, 2024, to delist the company and exit the Johannesburg Stock Exchange (JSE), alleging management shenanigans.
Smit was also a former chairman of Ascendis after a consortium of shareholders led by him overturned the previous management when the group struck financial difficulties.
Smit has written to the JSE, Financial Sector Conduct Authority and Takeover Regulation Panel to alert them to alleged fraud, saying he has documents to prove that the shareholders have not been given Information, which should have been included either in a Sens (stock exchange news service) announcement or in the circular, so that investors could make an informed decision.
He has asked regulators to “at least stop the vote” and undertake an urgent investigation into allegations and whistle-blower documents.
Smit alleges that the information, in a presentation by Ascendis CEO Carl Neethling to the board of Ascendis Health also clearly stated that the exit offer fell far short of the value of Ascendis Health.
The company’s path to delisting began after it amassed a series of losses and massive debt which led to a management shake-up and turnaround strategy along with asset sales.
In June 29, 2023, the company resolved to initiate a process to delist from the JSE, in line with its strategy to unlock and return value to shareholders over the short- to medium-term on its journey to health.
The board had agreed to propose an ordinary resolution at a general meeting of shareholders to approve the delisting of company shares from the main board of the JSE.
A consortium led by ACN Capital IHC, an entity owned and controlled by Neethling had on November 24, 2023, delivered to the board of directors of Ascendis a letter confirming their firm intention to make an offer to acquire all of the ordinary shares of no par value in the share capital of the company from those shareholders not wishing to remain invested in the company, other than the shares held by one or more subsidiaries of Ascendis and the shares held by the Consortium members being 571 386 858 shares.
The offer was extended to all shareholders looking to divest their interests as part of the delisting for a cash consideration of 80 cents per share to facilitate the process.
However, Smit alleges Neethling has lined things up to walk away with a sweetheart deal.
“Secondly, they already have buyers lined up for two businesses and it shows a clear path on how within a very short turnaround time he will recoup the funds and therefore only effectively provide bridging finance to meet his end goal of walking away with over 50% of the company,” he said.
Further allegations touch on corporate governance issues.
Smit questions how Neethling has been allowed to act as both CEO and chief financial officer for more than a year without any checks and balances required in a listed environment.
He also questions the independence of the board, writing to the JSE that he had further evidence proving the board was also not independent with some members owing the company in excess of 10 million shares.
Business Report reached out to the JSE and Ascendis Health for comment.
The JSE said it was busy assessing all the information submitted to the JSE.
Neethling responded for requests for comment on Saturday, “We are obviously overwhelmed by the allegations and the attacks on the company and are still processing all the information for now.”
He said, “I can confirm the following”:
– There is no undisclosed transaction or deal whatsoever with any related party, specifically not Neethling or a Neethling affiliated party of any nature.
– There is no other deal in any stage of the process that has not been disclosed. The main contention was that Ascendis Consumer Brands was being sold to two related parties, being Austell and Calibre. There is not element of truth to this, save for both parties previously expressing an interest in Ascendis Consumer Brands.
– We have no knowledge of any director owing the company any shares or any monies at all.
– There is no bridge financing or any other financing at play at all.
– There is no goal to effectively own more than 50% whatsoever.