[miningmx.com] — So, the JCI/Randgold & Exploration merger is back on again, after an 18-month delay. And guess what: the terms are exactly the same as when the previous proposal was published, back in April 2007.
At one new R&E for every 95 JCI, that will effectively wipe out my small holding in JCI (some day, I must work out precisely what corporate developments led to my acquiring it – I certainly never bought any JCI shares).
More to the point, though, what has been gained by the delay, except for increasing the already substantial bills for lawyers and accountants? The only answer can be, nothing.
The original merger plan, you may remember, was abandoned for no good reason while the two tried to arrive at an alternative settlement. That too didn’t work out, and then it was announced that they would be returning to arbitration to settle their differences.
But now, suddenly, the original merger proposal is back on the table. What a waste of time and money! If only all those resources had been ploughed into pursuing all the claims the two have against various parties, shareholders would have been far better off.
Mind you, some things have changed. Dave Nurek has resigned as chairman of both companies, and Peter Gray as CEO of R&E, which goes a long way to resolve continuing – and surely justified – complaints that their roles on the boards of both companies created irreconcilable conflicts of interest.
The complaint that they are also conflicted, in a different way, by their associations with Investec, the terms of whose bail-out of the group remain controversial, remains, however.
Nurek was succeeded at JCI by Peter Thomas, a non-executive director of Investec, previously a non-executive director of JCI and a former CEO of Unisec, whose father A S Thomas was, ironically, a career executive and director at the old JCI.
In another irony, Nurek’s successor (in an acting capacity, at this stage) at R&E is one David Kowarsky, who also spent much of his career climbing up the greasy pole at the old JCI, culminating in the post of finance director, before a not entirely happy spell as CEO of the then Times Media, now known as Avusa.
JCI has also agreed to pay R25.5m to Durban Roodepoort Deep to settle disputes over the purchase, negotiated by Roger Kebble, at the turn of the century of the Rawas gold mine (so-called) in Indonesia. DRD was claiming R122m for the shares it issued in this allegedly fraudulent transaction, and frankly I think JCI got off lightly.
But R&E will be even luckier if it receives anything like that proportion of the summons it recently issued Gold Fields over that company’s US$1.5bn acquisition of Western Areas (50%-owner of the South Deep gold project), claiming anything between R519m and R11bn.
It’s significant, though, that both these developments came only a month or so after the splitting up of the Nurek-Gray axis. It was never clear how Nurek and Gray managed to negotiate with themselves, and it may well be that Thomas and Kowarsky brought a new independence coupled with the benefit of a long-standing acquaintance.
Still, it’s premature to assume that we now have a done deal. The Cape-based Trinity Asset Management group and the George family (Quintin and his father, Peter) appear to have been reconciled to the merger, but the attitude of ex-SA London investor Monty Koppel, a formidable opponent, is unknown.
Koppel was in particular opposed to the terms of the Investec bail-out, which arguably will bring the bank a huge profit at little risk (admittedly, it’s difficult to argue with Investec’s counter-claim that but for its support, JCI and R&E would both have collapsed, and their shareholders could have lost everything).
Smoothing the passage of a JCI/R&E merger may be the logical solution to that part of the problem. It’s a pity that their claims and counter-claims against each other will now never be tested, but who knows, that might have provided just another beanfeast for the lawyers with little benefit for anyone else.
But it leaves the question of the Investec bail-out untouched. And in any event, as we’re already well into November, the merger saga will drag on well into 2009. The latest announcement puts a completion date at the end of March, but in the light of how things have progressed so far, it will be no surprise if this has to be pushed back. So it may be a while before the final chapter is written.
