It did smack a little of ex-post-rationalisation, and it did seem like an enormous fee for access to the board, but former Public Investment Corporation (PIC) CEO Dan Matjila was on the right track when he told the Mpati commission of inquiry about the importance of having director representation on a board.
This, Matjila told the commission, was the main motivation behind the decision to invest an additional eye-watering R9.35bn into Steinhoff via a loan to a vehicle set up by former trade unionist Jayendra Naidoo.
The additional investment, which was made through the PIC’s Isibaya Fund, would give the PIC an entitlement to appoint a black representative to the Steinhoff board. That representative was Naidoo.
It seems that Matjila, unlike almost everybody else caught up in the Steinhoff collapse, had doubts about the quality of Steinhoff’s corporate governance back in 2016. Instead of cashing in, he opted to pump huge amounts of money into it. Could he really have believed that just one director on the board would make the difference?
According to the most recently available information, as at March 2017, the PIC appeared to have board representation at most of the companies in which its development fund Isibaya is invested.
Sadly, having a director on the board provides no guarantee of sound governance. Just ask Christo Wiese. He was chair of Steinhoff and was unaware of any poor governance.
Amcu and Implats set to butt heads again
Impala Platinum shareholders will understandably feel some angst about the pending wage talks with the Association of Mineworkers and Construction Union (Amcu) just as their company is showing signs of financial life after years of hardship.
A cursory glance through the past five or six years’ annual results shows just how difficult a time it has been, with a total dividend of 95c last paid in 2013, just as SA’s platinum sector was taken into a damaging five-month strike in the first half of 2014 that wrought havoc on the Implats balance sheet.
Net debt soared, the company conducted bond issues and equity raises to keep key projects to build two new mines on track, while dealing with the fall-out from the strike and low prices for its platinum group of metals.
As the company comes up to the release of annual results for its 2019 financial year to end-June, it announced the redemption of a $250m bond due in 2022, an exercise that will entail the issue of up to 64.3-million shares and a cash sweetener of up to R600m to entice bondholders to exit early.
The rationale is simple: remove expensive debt, which costs Implats R320m in interest payments, and start clearing the path towards resuming dividends to capture the upside of improved metal prices, particularly for palladium and rhodium.
The higher metal prices are just one aspect of the world’s third-largest platinum miner’s ability to tackle it debt. Another, more fundamental reason is the operational turnaround of the unprofitable Rustenburg mines, a process that has gained traction, with output and safety metrics all headed in the right direction.
However, investors are not the only ones seeing the recovery. Amcu, the dominant union, has pegged its basic wage demand at R17,000 a month, up from its rallying cry of R12,500 a month since it rose to prominence in 2012, and the average R11,500 the lowest paid workers realise going into the talks.
Combined with other demands, the total ask is R30,000 a month. The industry has yet to respond ahead of the release of its financial results, but it’s a safe bet that the counter-offers will be nowhere near these amounts.
Unrealistic wage demands and protracted strike action could very well erode hard-won gains at companies such as Implats and lead to job cuts and shaft closures.
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