[miningmx.com] — THE call for an extraordinary shareholders meeting at suspended gem company Kimberley Consolidated Mining (KCM) – as reported last week on Miningmx – has brought simmering tensions to the surface.
Former CEO and major shareholder Hein Le Riche, as part of a consortium that is claiming a loan account of R9m in KCM, has decided to put up a fight.
He told Miningmx on Wednesday that he was determined to fend off any attempts by a group of disgruntled shareholders to kick out the current board at the upcoming meeting.
The meeting, set for August 6 in Kimberley, has been called by a group of shareholders headed by former operations director Johann Cilliers.
The intention is to remove the current board comprising Trevor Pikwane, Ranthoko Rakgoale, Alexander Rodionov, acting CEO Phemelo Sehunelo, and Johann van Tonder.
The only director not in the firing line is the recently appointed financial director, Riaan Visser, who also serves as KCM’s company secretary. Strangely, former CEO Hein Le Riche and former FD Koos Pieterse (now financial director of Media24 in which Fin24.com and Miningmx are housed) are also on the “hit list’ despite both directors resigning their board seats earlier this year.
The new directors nominated for the KCM board include Phillip Dexter, a member of parliament for the Congress of the People (Cope), French investor Patrick Sagaspe, Jeff Closenburg and Cilliers.
Support for rescue
At a recent meeting of disgruntled KCM shareholders in Cape Town, there was clear shareholder support for a rescue plan outlined by Cilliers.
The rescue plan would include revisiting the current contract mining arrangement with director Trevor Pikwane and possibly injecting new capital via a mystery investor that would be introduced by ex-union heavyweight (and board nominee) Phillip Dexter.
KCM acting CEO, Phemelo Sehunelo, countered by saying the proposed rescue plan for KCM should be circulated to the shareholders before the meeting with proof of finance to fund this plan. “Only then can the shareholders make an informed decision”.
Sehunelo pointed out that to date Pikwane had advanced in excess of R6m to the company to settle creditors and fund current expenses in terms of a loan funding arrangement. “The current board is doubtful that the requisitionists have the ability to provide similar funding.”
At last week’s meeting of disgruntled shareholders in Sea Point, Dexter suggested there was an (unnamed) investor willing to inject new capital into KCM as well as bring new mining assets onboard. Dexter said the investor could also look at making an offer to buyout minority shareholders.
The dozen shareholders attending the meeting claimed to speak for around 20% of KCM’s issued shares with suggestions that numerous other shareholders were willing to support proposals to take control of the company’s board.
Le Riche to fend off coup
Former CEO Hein le Riche, however, told Miningmx that he – along with a consortium of shareholders that included former FD Koos Pieterse and Pikwane – would attempt to fend off a boardroom coup.
He said the consortium spoke for up to 40% of KCM’s issued shares.
Le Riche contended it was a cruel irony that the very people who had a hand in destroying the value in KCM were now trying to take over the board.
He argued that Cilliers was dismissed from KCM in 2008 and that two other board nominees Dexter and Sagaspe were involved in unsuccessful investment deals that would have brought much needed new capital to the table in the formative stages of KCM.”
“I still believe the company has huge potential. but I go ice cold when the same people that basically destroyed the company now want to betray the public and shareholders to get themselves elected to the board.”
Le Riche questioned the shareholding of Sagaspe (under nominee company Centreville) – arguing the shares were never paid for and should not be allowed to vote at the upcoming AGM.
While former directors and the current board clearly can’t claim any success in extracting value for shareholders, it seems the trump card for the Le Riche consortium may lie in a R9m loan account on KCM’s books.
Miningmx is in possession of correspondence – signed off by FD Riaan Visser – which confirms that the loan account due to Le Riche, Pieterse and Pikwane sits at around R9m.
Le Riche told Miningmx there would be no hesitation by the consortium in calling in the loan accounts should the shareholder faction led by Cilliers remove current directors.
With no recent audited financial statements to work with it is impossible to quantify Le Riche’s claim that calling in the loan accounts could sink KCM – which recommenced mining (on a contract basis) at its Bo-Karoo mine late last year.
One of the major issues for KCM shareholders is that no audited financial statements are available for the last two financial years (to end February 2009 and end February 2010) – meaning shareholders have been in the dark as to KCM’s financial (and operational) status.
The KCM board – a response to queries from Cilliers around the threat of the company’s listing being terminated on the JSE – said it was in constant contact with the JSE around progress towards full compliance with the listing requirements.
“The Board has requested the JSE to grant an extension until 31 August 2010.”
