Independent Media sets the record straight on JSE listing
Gauteng / 17 April 2018, 11:15am / Independent Media
Independent Media executive chairman Dr Iqbal Survé sets out the facts regarding the JSE listing saga.
Independent Media is one of the most influential media companies on the African continent, with a stable of well-known credible brands supported by thousands of South Africans and commercial partners.
The company is the largest black-owned and managed media house in South Africa with a broad base of stakeholders including the Sekunjalo Independent Media(SIM) consortium (inclusive of several diversified entities such as trade unions and civil society groups), Interacom (China International Television Corporation and China-Africa Development Fund) and the Public Investment Corporation (PIC).
Independent Media, through SIM, was included in the plans of Sagarmatha Technologies, to form part of the multi-sided platform (MSP) technology company’s ecosystem which was to list on the JSE last week. The details of the transaction and all related information were included, with full transparency, in the pre-listing statement (PLS) which was approved by the JSE.
In the weeks leading up to the listing, certain opposition media companies embarked on a disinformation campaign against Independent Media in an attempt to scupper the listing. Snippets of information, contained in the 212-page PLS, were extracted and represented as an “exposé”, in an attempt to mislead the public and create a picture of wrongdoing and to cast suspicion on some of the people and companies involved in Sagarmatha Technologies.
The most malicious of these was the narrative that Independent Media was “technically insolvent” with substantial debt which it would not be able to repay. This lie was repeatedly peddled by our competitors in print, online and on the radio. Independent Media reserves its rights in this regard.
In the interest of our employees, our loyal readers and our valued advertisers and the public at large, I would like to correct the disinformation with the following facts:
Independent Media’s acquisition by Sekunjalo Independent Media consortium in 2013 was a private equity transaction. This is a very efficient form of business transaction which is routinely used to create value from investment opportunities for all stakeholders.
Independent Media has no bank debt, which is very unusual for a company of its size. Independent Media has loans from shareholders who have a vested interest in ensuring its success.
Independent Media’s assets far exceed its shareholder loans and the company has positive equity with a strong balance sheet (shareholder loans, in any event, are the most junior of all debt). The company’s assets therefore comfortably exceed its liabilities including its shareholder debt. Independent Media has the capacity to take on additional debt for the growth and expansion of its business. However, it has not done so since its majority shareholder, Sekunjalo Investment Holdings, has funded, directly and indirectly, the growth of Independent Media over the last four years.
Competitor media did not base their narrative on the financials of Independent Media. Instead, they gleaned their information from the consolidated group accounts which were contained in the PLS and thereby, misinterpreted and deliberately misrepresented the solvency of Independent Media. Lacking any journalistic integrity, they did not seek clarity from Independent Media and instead, sought to portray this as a so-called “exposé".
Much has been written by these competitors about Independent Media not being able to repay its loans to its shareholders. The truth is that Independent Media is ahead of its scheduled repayment of shareholder loans and has confidently, made arrangements to honour the 50% repayment commitments in August 2018. To date, SIM and Independent Media together, have repaid in the region of R600m to its shareholders.
Attempts to portray Independent Media in a negative light are a stark reminder of apartheid-era-style disinformation campaigns. It reeks of monopoly and is indicative of a desperate attempt by our competitors to thwart us.
Print media companies the world over are going through a difficult time. Independent Media is no different, but the company chose to invest in growing its business, with the full support of its shareholders. This is evidenced by substantial investments in new media platforms, technology and its printing and distribution business. Incidentally, shareholders could have opted to take dividends as opposed to reinvesting the money to grow the business. However, they elected to take a long-term view, which includes keeping people employed, investing in new projects and growing the business.
So, why is Independent Media the subject of such scrutiny by its competitors?
No other media company has been subjected to this level of examination and scrutiny on the eve of a listing. There was a deliberate and unprecedented focus on Independent Media’s current shareholding and in particular, the Public Investment Corporation. It is a matter of public record that the PIC invested R1bn in shares (25% equity) and debt in Independent Media as part of a private equity transaction. This pales in comparison to the hundreds of billions of rand that the PIC has invested in white companies on the JSE. Some of these companies will never be able to deliver to the PIC a return on its investment or shareholding, yet our competitor media is hypocritical about this investment. As an example, companies such as Tiso Blackstar have lost billions in shareholder value yet not a single word is said by the critics of Independent Media about this travesty. Independent Media, on the other hand, has created significant value for the PIC as an investor, yet is being portrayed differently due to the vested interests of our competitor media.
More importantly, institutions such as the PIC have an imperative to invest in and provide equity and debt to black companies to effect meaningful economic transformation in South Africa and in the words of President Ramaphosa, create an economy for “all people”. The focus on the PIC is deliberate and malicious and aimed at preventing them from investing in black companies and consequently, prevent black business from having access to the capital markets.
What future is there for black business in South Africa if through the power of vested interests, they are denied access to the capital markets? What are our hopes for a diversified and inclusive economy?
It has come to the point where we now ask ourselves whether our competitors are telling us that there is no room for competition; that we should remain monopolies; that there should be collusion in the media industry; and that black-owned media companies should not have access to the capital markets, which should remain the preserve of white-owned media companies in South Africa? The general public should be asking these questions too.
We don’t believe that the conduct of our competitor media houses is in keeping with the spirit of an inclusive economy and the right of black South Africans to meaningfully and fairly participate in the economy. What hope is there for an inclusive economy and one that serves all people if black companies, like Independent Media, are prevented from having access to capital in order to scale, thus stopping them from contributing to the local economy and sharing the vision for Africa?
The negative narrative peddled on our competitor platforms - online, in print and on the radio - is a red herring used to exert undue influence on the regulators such as the JSE and investors, to stop the listing in an attempt to surreptitiously acquire some of IM’s assets by their own admission.
Independent Media rejects with contempt the unethical conduct by these competitors and members of their management and editorial teams to disguise their true intentions of trying to undermine Independent Media and acquire some of its assets, which is emblematic of the worst form of predatory and anti-competitive behaviour in the market economy.
The collusive and vigorous attempt to pummel Independent Media and Sagarmatha Technologies into submission is reckless in the extreme. These attempts have put at risk the employment of thousands of people and are deplorable. Their objective to deliberately disrupt the commercial viability of Independent Media is both deceitful and devious.
Independent Media welcomes competition, but the ruthless pursuit of profits at the expense of economic growth, inclusivity, and transformation by most of our competitors, will come back to haunt them.
Independent Media acts with restraint since it values the employment of its people and those of its competitors. These are hard-working individuals who come to work every day and do not deserve to be treated with such disrespect and disdain simply because there is a ruthless pursuit of profits and desperation by our competitors to win market share at all costs.
It is time for introspection and reflection by our competitors and for them to ask: Do we really build an inclusive economy in this way?
* Dr Iqbal Survé is Executive Chairman of Independent Media.