Just when it looked as if Prime Kapital might quietly walk away with control of MAS, the tide has turned.
The creeping acquisition disguised as a voluntary offer, sweetened with cash and opaque preference shares, now faces its most formidable challenge yet: a co-ordinated shareholder rebellion, wryly referred to as “The Bomb Squad” in an analyst note that landed on my desk in the past week.
Many of the institutional investors I called out in this column last month — nine, to be exact, including household names such as Ninety One, Stanlib, M&G, and the Eskom Pension and Provident Fund — have banded together to requisition an extraordinary general meeting (EGM) (“PKI offers sweetened poison pill to MAS shareholders”, June 24). Together, they hold more than 15% of MAS shares, giving them the legal right under the company’s Maltese-incorporated articles to force the meeting.
The requisitioning shareholders’ letter reads like a charge sheet. They accuse the board of inertia, of acting as little more than a conduit for PKI’s announcements. They point to perceived conflicts of interest among directors, notably Mihail Vasilescu, who has ties to Prime Kapital, and Dan Pascariu, viewed as too close to Martin Slabbert and Victor Semionov. They want them gone. And they’re proposing a new, heavyweight board slate, including Des de Beer of the Resilient stable, Robert Emslie, Sundeep Naran and Stephen Delport. No wallflowers here.
The shareholders want answers, specifically about the development joint venture (DJV) between MAS and Prime Kapital, which has for years been the locus of confusion, complexity and, increasingly, shareholder suspicion. Why, they ask, was the development margin not disclosed? Why did MAS provide capital to the DJV only to receive nothing back, while PK used it to quietly amass a strategic stake? Was that financial assistance lawful under Maltese law? Why did a 2022 shareholder circular omit key contractual details now revealed in recent Sens disclosures?
These are not new questions. They are the same concerns raised weeks ago in these pages now resoundingly echoed by shareholders representing more than 15% of MAS equity. What was once speculation about governance drift has crystallised into formal, public accusations. The secrecy surrounding the DJV’s structure, the opaque preference share mechanics and the piecemeal disclosures, are no longer tolerated. The investors want a board-level committee to investigate, report and finally tell the full story.
All of this comes after PKI’s own pivot. Having spent the past two months sweetening its offer to minorities, lifting its cash bid from €0.85 to €1.20 per share and dangling a new “enhanced value unlock strategy” in place of outright control, it tried to look like a benevolent capital allocator.
But the language in its undertakings was always careful. The offer to play nice would vanish the moment a competing bid emerged. In other words: behave, or the cash goes away.
It almost worked. The share price responded positively to the prospect of the asset realisation plan and dividends. But the market didn’t forget who caused the problem in the first place. As one wandering albatross put it: Prime Kapital used MAS’s balance sheet to starve it, weakened the price, built a stake on the cheap, and now wants to buy the rest using the same funding mechanism. “It’s absolute brilliance,” said the albatross. “And absolutely galling.”
The EGM requisition letter calls that bluff. It lays out a forensic timeline of decisions, disclosures and omissions dating back to 2016. It accuses the board of failing to disclose material terms of the DJV. It questions why changes to the DJV’s mandate, including using MAS funds to buy MAS shares, were not put to a shareholder vote. It asks why financial assistance rules under Maltese law weren’t triggered. And it wants an independent committee, finally, to answer.
In a statement, the Public Investment Corporation said it “notes and welcomes the recent shareholder-led developments at MAS, particularly a call for [an] extraordinary general meeting to deal with governance concerns at the company”, and that “good corporate governance is essential to maintain investor confidence and long-term sustainable value creation”, adding that it will “continue to monitor and engage the company on developments in this regard”.
That’s as close to a thunderclap as it gets in SA capital markets, and a sign that MAS can no longer pretend this is business as usual. It’s also a litmus test for the JSE’s foreign listings framework. MAS is Maltese in registration but South African in practice. And yet shareholders have discovered that the normal protections afforded under SA takeover law don’t apply. PKI can buy shares up to, and even beyond, 50% without triggering a mandatory offer. It can offer preference shares that look more like convertible debt with little oversight. And it can cloak material related party agreements behind Maltese confidentiality. That can’t continue.
The JSE listings requirements, designed to protect shareholders, may have been quietly skirted. Related party transactions were not fully disclosed. The DJV’s investment shift into MAS shares may have constituted financial assistance. Price-sensitive information was delayed for years. Conflicted directors remained in place. The JSE has to explain how this slipped through and whether its foreign listings framework has become an unguarded back door.
JSE CEO Leila Fourie has been trying to position the JSE as a gateway into Africa for global firms. However, MAS being domiciled in Malta has exposed all sorts of risks owing to Malta having less stringent takeover requirements. How does the JSE protect SA investors from foreign companies in these sorts of jurisdictions?
The question is whether the JSE will step up or continue to hide behind the legal technicality that MAS is Maltese-incorporated. I’ve sent a list of questions to Andre Visser, head of issuer regulation at the exchange, and I’ll publish his response when it arrives.
I’m told a number of shareholders have submitted to the JSE instances of what they regard as numerous potential breaches of JSE listing requirements, and have yet to receive any feedback. The exchange’s silence and Maltese defence is looking increasingly feeble in the face of this suspect malversation.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch.’ Contact him at michael@fmr.co.za.
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