Simmers mulls dispute solutions

Brendan Ryan | Fri, 25 Sep 2009 12:02
[miningmx.com] -- VULISANGO and advisor Bernard Swanepoel “have a bit of hill to climb” in forcing board changes on Simmer and Jack Mines (Simmers) according to chairman Nigel Brunette.

Brunette told Miningmx that corporate action by Vulisango and Swanepoel was one of three possible outcomes to the current dispute between Vulisango and Simmers.

Vulisango is Simmers’ black economic empowerment (BEE) partner holding a 22% stake in the company. The dispute became public earlier this week after five directors – four of them linked to Vulisango – resigned ahead of the annual general meeting (AGM).

Brunette commented, “Vulisango and Swanepoel can go around canvassing support from shareholders to change the Simmers board and they are fully entitled to do that.

“But, if you look at the outcome of the voting at the annual meeting, that tells me they have a bit of hill to climb.

“Some 75% of shares in the company were represented and 64% of those voted in favour of (CEO) Gordon Miller."

Miller was one of the directors up for re-election at the annual meeting.

Brunette said an alternative solution might be that Vulisango opts to do nothing until the outcome of the court case with JCI over Vulisango subsidiary Xelexwa.

According to Vulisango CEO Valence Watson that is due to be heard on November 16 and he described the potential consequences of this legal action as “pumpkin time” to Miningmx at the AGM.

This action, which both sides agree should have nothing to do with Simmers, lies at the heart of the dispute.

It concerns the payment terms by Vulisango to JCI for the shares in Simmers it originally obtained from JCI.

Vulisango has accused Simmers - in particular CEO Gordon Miller - of taking sides with JCI in the dispute. Brunette has accused the four Vulisango appointees on the board of “unresolved conflicts of interest which have resulted in breaches of fiduciary duties” because of this dispute.

Brunette commented, “we did not choose to get rid of our BEE directors. They breached corporate governance guidelines and were not prepared to answer to the shareholders over this. That’s their fault not our fault.”

At the AGM Watson accused Brunette being “oppressive” in his dealings with the Vulisango appointees and also that Brunette’s underlying strategy was to remove them from the board.

Swanepoel told Miningmx that “it was better for Vulisango to take its directors off the Simmers board so it can respond as an active shareholder with significant rights without being compromised.”

Brunette commented that following the resignations, “Vulisango can pursue its case against JCI unfettered by me telling their directors on the Simmers board what they can and cannot do.

“Once there is a clear outcome to the JCI legal dispute there is nothing to stop us sitting down with Vulisango and trying to get the board back in shape.”

Brunette said the third possible outcome was “a restructuring of the company and the group.”

He said this was being looked at by advisors Macquarie First South but stressed the primary requirement was that such a restructuring had to be a good deal for the company as a whole.

“In the meantime we will look at getting some good, independent HDSA (historically disadvantage South African) directors back on the board as soon as we can. “

According to Swanepoel, that will not be easy.

He commented, “if all your black directors walk out on you because you threatened to kick them out then it will be a tough call for another person to step onto that board without looking compromised.”

Swanepoel was criticised by Brunette at the start of Monday’s annual meeting over his views.

Brunette told the meeting, “although this dispute involves our BEE partner Vulisango and the company it is not fundamentally about BEE’s role in the running of this company.

“It revolves around the idea that Vulisango may pursue its various interests unfettered but that those of its directors and friends who sat on Simmers’ board may not do so if the pursuit of those interests is followed at the expense of Simmers.

“We do not have ‘third class citizens” in Simmers as Bernard Swanepoel has publicly and misguidedly alleged.

“We instead have a profound belief that all of management is answerable to the board and all of the board is answerable to the shareholder body as a whole.”

The writer owns shares in Simmers.