Bernard Swanepoel, To The Point
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Village's cash plan runs foul of JSE rules
Allan Seccombe
Posted: Thu, 20 Nov 2008

[miningmx.com] -- BERNARD Swanepoel’s plans to raise R20m through a claw-back rights issue for the JSE-listed Village Main Reef Gold Mining Company have collapsed in a heap because of JSE rules.

Swanepoel’s new company To The Point has a 48% stake in Village, which has no operating assets, but will serve as a listed vehicle to acquire mineral assets.

The claw back rights offer was designed to raise R20m, allowing Village to make some acquisitions and, importantly, potentially raise To The Point’s stake in the company to 87% if none of the shareholders pursued their rights to the new shares.
the inconsistency and inflexibility of the JSE
Swanepoel said early in October he was confident the scheme would boost To The Point’s holding above 50% at the very least, giving it full control of Village and allowing it to chart the company's future.

The JSE said that it would consider de-listing or suspending Village if the rights offer went ahead because it would change Village’s listing definition to a “cash shell” from a “curtailed operation”.

“The JSE will, however, grant Village two weeks to make representations to the JSE as to why Village should not be suspended and/or terminated. The two week period will commence on the date that coincides with the listing and trading on the JSE of the claw-back shares.”

That is completely unacceptable, Swanepoel said.

“They’re basically telling us we can go ahead with the rights issue at our peril, but we’re not prepared to gamble investors’ money on the chance that Village may or may not be suspended,” Swanepoel told Miningmx.

The R20m was not earmarked for any specific transaction, which appears to lie at the root of the JSE’s decision.

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One way around the JSE’s decision, Swanepoel said, is to find a potential transaction.

“We can only do it if we know what we want to do with the money or as part of a specific deal. We can’t raise the money in anticipation, which sounded prudent and responsible to me. We have to leave it until we’re ready to do a deal,” he said.

“If we could have linked it to a specific transaction we’d not have had the problem with the JSE battling to interpret its own rules,” he said.

The frustration felt by Swanepoel, a non-executive director at Village, at the JSE was clearly evident in a statement notifying shareholders the offer had been cancelled.

“It is unfortunate that the planned resurrection of Village is delayed due to the inconsistency and inflexibility of the JSE,” he said.

“This is causing further delays in our efforts to revive one of the oldest listed companies on the JSE. Despite the ‘red tape’ we still believe that Village could be the “next generation” resources company going forward,” he said.

Swanepoel has conceded that R20m doesn’t buy a lot, but that it could be leveraged in some way. Retaining a listing would be critical to funding any larger deals. He has talked of potential investments in coal, both South Africa and in Zimbabwe, base metals and even gold.

“This shouldn’t dramatically affect us. This was going to put some cash in the company. You can do small deals with that much cash, but any decent sized deal would need a follow on capital raising or the use of script,” Swanepoel said.

Swanepoel was the CEO of Harmony Gold, one of the world’s top five gold producers, having built it up from a single mine. He left suddenly in 2007 after a string of quarterly losses, unmet targets and an accounting mess that led to a downward revision of financial results.