Brian Gilbertson. Picture: BONGANI MGUNI
Brian Gilbertson. Picture: BONGANI MGUNI

Dissatisfied shareholders with more than half of diversified miner Pallinghurst Resources’ shares were likely to vote against the re-election of nonexecutive directors at next week’s annual general meeting (AGM) as part of a wider protest against management, sources said on Wednesday.

Pallinghurst is chaired by Brian Gilbertson, a prominent mining deal maker.

Apart from the re-elections, shareholders may also vote against the remuneration policy, although that will not be binding on Pallinghurst.

Some of the dissatisfied shareholders supported Pallinghurst’s proposals at the special meeting to buy out Gemfields shares, but are said to be unhappy with other proposals presented at the same time, such as raising nonexecutives’ remuneration, changing the management structure and extending the life of the management structure by 50 years.

One shareholder said while Pallinghurst’s top executives had earned generous fees in the past nine years, shareholders had earned nothing and nonexecutive directors had not acted to protect minorities’ interests. The share price had fallen from R10 at listing, to 288c.

Pallinghurst’s largest shareholders include Christo Wiese, with 19.6%, followed by Old Mutual Investment Group with 9.46% and Oasis Asset Management with 9.04%. Oasis Crescent Capital owns another 6.22%, while Investec Asset Management (IAM) holds 6%.

In a recent note on Pallinghurst, IAM’s value portfolio manager, John Biccard, said while IAM believed Pallinghurst was undervalued, it feared this value would not be realised as a result of the corporate action on Gemfields. IAM was concerned the acrimony between Gemfields and Pallinghurst’s management that arose during the takeover could result in the loss of the skills and experience of the Gemfields executive team, which had built up the business and would be difficult to replace.

Biccard said for these reasons, IAM had voted against the Gemfields proposals and would be voting against the re-election of directors at the AGM. He urged other Pallinghurst shareholders to "think carefully about the current situation since it would be a shame to see the value of the underlying business lost due to shareholder apathy".

James Regout, head of international private equity at Old Mutual Alternative Investments, said he had not yet filed his proxy vote for the AGM.

He was unhappy that remuneration was bundled with other issues in the special proposal accompanying the Gemfields proposals, while the vote on remuneration at the AGM would be nonbinding.

Pallinghurst CEO Arne Frandsen could not be reached for comment.

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