The meeting, which was called at the behest of Alan Gray, would see a new board constituted as the current board led by Philisiwe Mthethwa was expected to step down to allow shareholders to air their views on the Allan Gray proposal to restructure the business and elect a new board.
Mthethwa said at the heart of the dispute between the board and Allan Gray, which holds a 25percent stake in the company, was Allan Gray’s proposal for the company to reconstitute the board and its suspicion that the board had forced former executives to resign.
“We are concerned that Allan Gray has ignored our serious concerns over the underlying reasons for the company’s recent poor performance, but rather focused on the resignation of senior executives as if they were pushed by the board,” she said.
“It was strange to us that the same unbundling proposal that was advanced by the resigned executives that was rejected by the board now came again from Allan Gray and later we received an expression of interest offer from a private equity firm for the same assets,” Mthethwa said.
Mthethwa has been at the helm of Group Five since 2007 and said the sudden loss of confidence in the board had left her “perplexed” as the board had enjoyed overwhelming support from shareholders in years gone by.
Andrew Lapping, the chief investment officer at Allan Gray, said according to their knowledge, former Group Five chief executive Erick Werner was fired by the board and he denied claims that Allan Gray and the resigned executives had discussed plans to dispose of the engineering and construction unit.
“Mrs Mthethwa told us in a meeting on April 24 that Mr Vemer was fired, so it is my understanding that he did not willingly resign.
“We did have meetings with Group Five executives after they released their results over the five or more years we have been invested in the company.
"At these meetings we probably noted to executives that we thought Group Five was trading below the sum of the parts value, but this would have been a minor part of the discussion.
"The far bigger thrust of our questions was always how the construction business could be fixed,” Lapping said.
Group Five announced the resignation of Vemer in February after the company reported its first six-month loss in 11 years due to an R255million settlement with the government over its role in the 2010 stadia collusion.
Over the past year, the company’s shares on the local bourse have lost almost a quarter of their value.
The resignation of Vemer began a spate of other resignations by key executives and culminated in Allan Gray losing confidence in the ability of the board to steer the company back to a growth path.
Mthwetwa said the board had opposed the proposal from management to unbundle the business as that would not unlock value for shareholders and would be detrimental to the industry’s transformation agenda.
Allan Gray has put forward five replacement non-executive directors: Reitumetse Huntley, Nazeem Martin, Nyami Mandindi, John Job and Michael Upton.
The group’s second biggest shareholder, the Public Investment Corporation (PIC) has forwarded the names of Fernandez and Thabo Kgogo, while Mazi Capital has recommended Edward Williams and Keneilwe Moloko to be new directors.
Mthethwa insisted that besides the board's squabble with Allan Gary, it had enjoyed the support of their shareholders.
The PIC said it will make its position on Allan Gray’s proposals to unbundle the business known at the meeting today, while Mazi and Coronation could not be reached for comment.
Sekgoela Sekgoela, a senior specialist for Investor Relations said: “The PIC has engaged extensively with Allan Gray, other Group Five shareholders and the company itself following the announcement of board resignations.
“The PIC will present its position on how the Group Five board is to be reconstituted at the extraordinary shareholders meeting and will not make public statements to this effect at this time,” Sekgoela said.
Mthethwa said the decision of the board to elevate Themba Mosai to the chief executive role had also brought discontent among the powers that be at the group.
“It is our understanding that according to the succession plan in place, Themba would be elevated to the post of chief executive.
"But his appointment apparently caused disharmony among some of the executives, who felt they could do a better job,” she added.
“We are happy as a board that shareholders have been given the opportunity to vote for a diverse group of non-executive directors rather than a package of five candidates as mooted by Allan Gray.”
Lapping said the company had in a letter to Group Five expressed their full support to Mosai and the executive team.
Allan Gray has in recent months taken the fight to boards of companies in which it holds a significant interest .