JSE publishes letter from disgruntled Grand Parade investors
The local representative of Burger King, Dunkin’ Donuts and Baskin-Robbins failed to pass on gripes from institutions wanting to oust the incumbent board
A list of grievances from Kagiso and other asset managers wanting to oust Grand Parade Investments’ incumbent board was published by the JSE on Wednesday morning.
The JSE said Grand Parade had failed to adhere to its directive instructing it to pass the complaints of the investors on to other shareholders. The investors were calling for an extraordinary general meeting to vote out the incumbent board of the Southern African franchisee of Burger King, Dunkin’ Donuts and Baskin-Robbins.
This prompted the stock exchange to bypass Grand Parade and issue the list of grievances to other shareholders directly ahead of the shareholder vote scheduled for December 5.
The letter attacking Grand Parade’s incumbent board was signed by Denker Capital, Excelsia Capital, Kagiso Asset Management, Rozendal Partners, and Westbrooke Alternative Asset Management.
The letter is titled “Good Governance Leads to a Sustainable and Healthy businesses, and Grand Parade Investments is no Exception”.
A key gripe is the collapse of Grand Parade’s share price since it switched its focus to fast food from gambling.
“It is estimated that Grand Parade has incurred in excess of R1bn of capital expenditure and cumulative net losses in the foods division up to the 2018 financial year equating to around 100% of the current market capitalisation of the company,” the letter said.
“Poor execution of this strategy has resulted in the businesses consistently missing the targets initially communicated by management.”
The first grievance on the list dealt with a number of related-party transactions, including the R130m acquisitions of catering equipment company Mac Brothers and Grand Foods Meat Plant, which contributed headline losses of R15.7m in the 2018 financial year and R22.2m in the 2017 financial year.
The second grievance was the remuneration of directors.
“Total bonuses paid to executive directors amounted to R15m in the 2017 financial year and R9m in the 2018 financial year, while the group made headline losses of R20m and R48m in 2017 and 2018 respectively and the most recent dividend paid to shareholders more than halved from 25c per share to 11.5c per share,” the letter said.
The institutions also raised the concern of the churn in Grand Parade’s CEOs and CFOs in recent years.