When I started my career as a financial journalist way back in late 1988 in the old Business Day offices (in that wonderful glass edifice called 11 Diagonal Street), the then managing editor, Neil Jacobson, sent me off to the ultracompetitive newsroom with this recommendation: "whatever happens, don’t take anything personally".
Jacobson’s words have served me well on the numerous occasions I’ve been blasted by edgy executives, slugged it out with fractious sources and tangled with tempestuous colleagues. After 28 years in journalism I still don’t intend taking anything personally — though last Friday afternoon I did come close.
After returning from a surprisingly illuminating Trencor AGM, I scanned the Sens notices that had dropped during the late afternoon. What caught my eye was from poultry group Sovereign Food Investments, whose AGM I eavesdropped on via a dial-in facility last Thursday. The announcement said the company’s joint venture partner in a factory shop venture was Cold Storage Group (CSG).
Identifying the joint venture partner in this lucrative little operation is prudent, since the issue was repeatedly raised at the AGM. What did rub me a little raw was the company’s contention that the disclosure was made "to avoid further inaccurate and misleading reporting on the matter". Huh?
But let me look past that slight on my reporting skills, and rather reach out a helpful hand to Sovereign. I would humbly suggest the company directors consider that their handling of questions around the identity of the joint venture partner just might have contributed to an atmosphere of suspicion among certain shareholders (and observers, for that matter).
I revisited the transcript of the meeting to confirm that Sovereign chairman Tom Pritchard was asked, very clearly and very politely, on no fewer than four occasions, to identify the joint venture partner that holds 65% of the factory shop operation. Though there was clearly consultation among directors after the questions were posed, never did Pritchard or any other director disclose the identity of the partner.
More importantly, no Sovereign director, at any time in the meeting, indicated either that confidentiality clauses precluded identifying the partner or that directors might respond to shareholders after consulting with the partner about disclosing its identity.
This is basic corporate communication, chaps: "Leave it out and sow doubt; obfuscate and they’ll speculate."
I suspect, though, that Sovereign has more pressing issues than improving shareholder engagement. At the AGM, special resolution number two, which dealt with the re purchase of shares, was voted down by shareholders. I must confess to not being sure if this will have implications for Sovereign’s proposed empowerment transaction, which involves a share buy-back. Country Bird Holdings (CBH), which is bidding to take over Sovereign, certainly believes the BEE deal can’t go ahead without a share re purchase agreement being in place.
But I’m sure it can be argued that a previous resolution on share buy-backs is applicable and that events at last week’s AGM can’t be applied retrospectively on the empowerment transaction. I foresee Sovereign spending more time (and money) in court, especially now that CBH has secured a blocking stake of more than 25%.