French investment group Wendel has filed a case with the Grand Court of the Cayman Islands that seeks to force a vote at IHS Towers around governance proposals after the board failed to put them forward at its June shareholders meeting.
The case is the latest in a series of events that sees IHS, which was co-founded in 2001 by current CEO Sam Darwish, at odds with its investors over governance issues.
MTN and Wendel, IHS’s second-largest shareholder, have voiced concerns about alleged governance issues at Africa’s largest cellphone tower business.
This follows MTN’s strongly worded statement calling out “governance concerns at IHS”. The mobile operator wants to have a greater say in IHS’s activities. It drafted a proposal to align its 26% equity stake and voting rights — capped at 20% — that failed to be put to a vote at IHS’s AGM.
Wendel and MTN, which together own about 45% of the company, argue that all shareholders with at least a 10% stake should have the power to nominate board members.
According to court papers, Wendel SE, via its subsidiary Oranje-Nassau Développement SCA FIAR, is looking to force the tower company to hold a vote on these matters.
“The defendant’s failure to notify all of its shareholders of the proposed resolutions and put the proposed resolutions to the shareholders for a vote at the AGM was a breach of section 8 of the shareholders agreement,” the summons said, according to a report by Bloomberg.
In June, Business Day reported that Darwish is afraid that MTN could team up with another investor or parties to launch a hostile takeover of the Nigerian tower business.
Behind the scenes, he believes that if the MTN and Wendel resolutions are passed by shareholders, MTN could be well placed to take control of the company. This is according to people familiar with the matter.
A hostile takeover is a corporate acquisition that is not supported by the target company’s management. The acquiring company makes an offer to purchase the target company’s shares directly from the shareholders, bypassing the target company’s board of directors.
In October 2021, IHS Towers made its US stock market debut, listing on the New York Stock Exchange. At the time, MTN owned about a third of the company and was thought to be on a path to a bumper payday, when it would eventually sell down the investment.
By June 2021, the group estimated the value of that 29% equity at R30.5bn. Selling down this stake, plus other moves such as repatriation of funds from Nigeria, were billed as ways to wipe out the group’s debt.
But market conditions have seen IHS lose half its value since listing. Having debuted at $16.69 a share, it now trades at $9.78. And even with a weaker rand, MTN’s piece of IHS, now 26%, is worth about R16bn.
IHS Towers hit back, saying a proposal drawn up by the mobile operator to have a greater say in how the tower business is run is not in its best interests. It has also rejected a call by MTN to convene an emergency meeting of shareholders, saying the company does not have the authority to do so.
MTN’s voting rights have been capped at 20% since 2014 as per an agreement with the mobile operator “to preserve IHS Towers’ independence and account for the fact that MTN is IHS Towers’ largest customer”.
With Bloomberg
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