The JSE has imposed a censure on Caxton and CTP Publishers and Printers over two announcements it made on the Stock Exchange News Service (Sens) in 2022.
The two statements — dated August 12 2022 and October 6 2022 — contained specific statements primarily relating to Mpact — SA’s biggest paper and plastics packaging business and recycler. The statements did not comply with the JSE’s Listings Requirements, the JSE said in a statement on Tuesday.
The JSE ordered Caxton to retract the specific statements on Sens, which it did in a separate announcement on Tuesday.
Caxton had its sights on Mpact for years as it built a 34% stake, but negotiations over a full takeover failed, leading to a legal battle.
In essence, the publisher of The Citizen and Farmers Weekly was trying to take over the company without making the mandatory offer to Mpact’s minorities, which would be triggered if it took its stake to 35%. It is doing so by trying to get competition regulators to allow it to file the deal as a merger.
As part of the mudslinging between the two companies, Mpact in 2022 dispelled a number of claims made by Caxton on the nature of proceedings between the two companies.
Mpact denied Caxton’s allegation that it wassoliciting support from shareholder Golden Era to oppose the merger and that it filed “secret representations” and affidavits with SA’s competition authorities.
It has also been alleged that Mpact would lose Golden Era as a customer since it competes with Caxton. “The board could not conclude, in the circumstances, that Mpact is likely to lose Golden Era as a customer,” it said.
Mpact, which was spun out of Mondi and listed on the JSE in 2011 and is valued at about R4.5bn, has previously denied claims by Caxton that the board has been hostile to a proposed merger and failed to disclose material information to shareholders. It accuses Caxton of lacking transparency.
The JSE said in its statement on Tuesday that it had established the Sens platform as a result of a need to disseminate relevant company information to the market on a real time basis.
“To ensure that shareholders and the investing public only receive relevant information, companies must ensure that the information that they wish to release is in fact relevant company information, being company announcements explicitly required in terms of the listings requirements and/or price sensitive information,” it said.
“The information disseminated by Caxton was not company announcements as required by the listings requirements or price-sensitive information as defined in Schedule 9. Price sensitive information refers to unpublished information that is specific or precise that could materially influence the market price of a company's securities if made public,” the JSE said.
In the August 12 statement, Caxton had said it considered that the Mpact board has not complied with its fiduciary duties, in that it had failed to disclose adequate details of the pending cartel case to shareholders and the risks associated therewith, notwithstanding that Mpact has admitted to operating a long-standing cartel with New Era, a subsidiary of Golden Era.
Caxton also said the Mpact board has also failed to disclose publicly all the material risks of a potential Caxton merger in Mpact’s 2021 risk matrix.
“In soliciting support from Golden Era to oppose a possible Caxton merger, the Mpact board has filed secret representations and affidavits before the Competition Commission and Tribunal, thereby exacerbating concerns held by Caxton that Mpact and Golden Era remain involved in the vestiges of their long-standing cartel,” the statement read.
Among the statements in the October 6 announcement that the JSE took issue with were Caxton's assertion of directors trading in Mpact shares valued at more than R15m while in possession of price sensitive information, that Mpact affords Golden Era, unspecified benefits and favoured nation preferences, including pricing, in its purchase of carton board and that Mpact and Golden Era stand accused of cartel conduct.
The JSE found Caxton “to be in breach of general principles (v) and (vii) of the listings requirements for failing to observe the highest standards of care in the dissemination of the two Sens announcements into the marketplace, whether directly to holders of relevant securities or to the public at large and for failing to promote investor confidence in standards of disclosure and corporate governance in the conduct of issuers' affairs and in the market as a whole.”
It said despite Caxton’s status as a major shareholder of Mpact, there was no direct obligation in terms of the listings requirements or legal duty for Caxton to disclose such information.
Moreover, the statements disseminated by Caxton in its Sens announcements were directly related to Mpact, encompassing aspects of its operations, governance, and business activities and thus not relevant company information for Caxton, the JSE said.
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