A couple of days in the past, on Thursday, 1 September, the Takeover Regulation Panel (TRP) issued a number of rulings in opposition to the listed Caxton group (Caxton CTP Publishers and Printers) following a string of complaints from Mpact regarding bulletins and press releases issued by Caxton and media interviews performed by its chair Paul Jenkins and managing director Tim Holden.
The rulings successfully gag Caxton and prohibit the corporate from making any additional public statements about its proposed acquisition of Mpact.
They come within the wake of Caxton accusing the Mpact administrators in public of failing of their fiduciary duties and withholding price-sensitive info from shareholders.
Caxton has indicated that it’s going to take the ruling on enchantment.
Surprisingly, neither the Mpact grievance to the TRP nor the TRP ruling disclosed that one of Mpact’s non-executive administrators serves as chair of the panel.
That Neo Dongwana serves as a non-executive director on the Mpact board and as chair of the TRP shouldn’t be a secret. The newest Mpact annual report and the corporate’s web site disclose this.
However, the obvious battle of curiosity shouldn’t be addressed within the TRP paperwork, regardless of its significance. Dongwana serves on Mpact’s Audit and Risk Committee, in addition to its Social and Ethics Committee.
Clash
The battle between Caxton and Mpact got here to a head on 2 June when Caxton voted in opposition to the approval of non-executive remuneration at Mpact’s newest AGM.
Caxton owns 34% of Mpact’s shares, which suggests the decision couldn’t cross because it required approval of 75%.
Read: Tensions between Caxton and Mpact boil over
The result’s that the non-executive administrators, together with Dongwana, haven’t been paid for his or her companies since then.
Wearing multiple hat is frequent in SA for any individual of the calibre of Dongwana, however on this case, disclosure of the actual fact – and the way the battle of curiosity was managed – appear essential, given the back and forth of allegations and accusations between Caxton and Mpact.
TRP responds
Zano Nduli, government director of the TRP, responded to a question associated to the battle by saying that Moneyweb’s request was “erroneously” addressed to the chair of the panel.
“Kindly note that the Chairperson of the Panel (nor any other member of the Panel for that matter) is not involved in the day-to-day running of the Panel. Therefore, Panel members (being non-executive members) are never involved in active matters before the Panel, including that which forms the subject matter of your enquiry,” says Nduli.
“The duty for the day-to-day working of the Panel falls totally on the executives and employees of the Panel, beneath the supervision of the Executive Director, Andile Nikani.
“Accordingly, the e-mail received from you earlier today has not been shared by the Panel staff with the Chairperson as she is not an executive, nor will it be shared with her following this correspondence,” says Nduli.
“Regarding the subject material of your enquiry, we advise that the Panel’s coverage is rarely to touch upon media enquiries regarding issues by which we’re concerned. What we will do, nonetheless, is to share a duplicate of our ruling on that matter, which is self-explanatory.
“The parties to that matter are aware of the contents of our ruling and their obligations concerning it. Therefore, we cannot expand further on what is already contained in our ruling.”
It ought to be famous that Moneyweb disclosed the connection between Moneyweb proprietor African Media Entertainment and Caxton’s majority shareholders within the first paragraph of the primary article revealed when the argument turned public.
The hyperlink between Moneyweb and Caxton was additionally disclosed to Mpact administration in an e mail asking for commentary on the matter and defined in telephonic discussions with Mpact’s public relations marketing consultant and Mpact CEO Bruce Strong on the time.
The disclosure has been repeated each time sensible.
Rulings
The panel’s rulings within the complaints by Mpact had been signed off by government director Andile Nikani, who dominated in favour of Mpact in all of the issues.
The complaints relate to varied statements made by Caxton on numerous platforms regarding Caxton’s intention to amass management of Mpact. One of these publications is a press assertion Caxton revealed on the JSE’s Sens information platform that lists the the reason why Caxton voted in opposition to totally different resolutions at Mpact’s annual common assembly.
Acting by legislation agency Webber Wentzel, Mpact complained to the TRP that the statements revealed by Caxton contravened laws promulgated in phrases of the Companies Act.
“The allegation is that the publications made by Caxton contravened Regulation 117 as such publications stem directly or indirectly from Caxton’s publicly stated intention of acquiring control of Mpact, and that such publications were not approved by the Panel in accordance with Regulation 117,” based on the TRP’s abstract of the primary grievance.
Caxton had the chance to reply, and Mpact a possibility to answer that, with Nikani having the final phrase in his ruling.
“The facts relied upon by Caxton in the complaint are not in dispute, and for the purpose of this decision, we have regarded them to be common course,” says Nikani.
“In light of the fact that the facts are common course, and we have held in favour of Mpact, and against Caxton, we have issued a direct ruling instead of making our determination under Section 169(1)(a) of the Companies Act.”
Nikani stated it was not obligatory for the TRP to nominate an investigator to conduct an investigation into the issues as all of the information are identified.
“I found it prudent to decide the complaint in terms of Regulation 118 of the Takeover Regulations.”
The panel needed to resolve on three points:
- Whether Caxton breached laws in publishing info about a proposed merger or takeover, particularly whether or not the publications fall inside the definition of “documents” in relation to “an affected transaction”;
- Whether or not Mpact breached Section 126 of the Companies Act for failing to co-operate with Caxton in Caxton’s efforts to make a suggestion; and
- Whether it’s competent for the TRP to challenge the aid sought by Mpact and gag Caxton from making additional publications or bulletins regarding its intention to amass management of or a controlling curiosity in Mpact with out prior approval of paperwork by the TRP (the “Gag order”).
Failure to co-operate
The TRP first determined Caxton’s grievance that Mpact has accomplished every little thing in its energy “to frustrate Caxton from making an offer”. Nikani stated this assertion is “so vague as to render it entirely unhelpful” to the panel.
He lists the actions that the legislation regards as irritating in a merger or acquisition provide however ultimately concludes that Caxton has not made a suggestion in phrases of laws. Thus, Mpact didn’t frustrate the method.
“It is common course that Mpact has not received an actual offer from Caxton. It is also common course that Caxton’s publications do not amount to an offer that is imminent, otherwise, it would have been compelled to make such an offer under our takeover laws,” based on the ruling.
Nikani refers to extra laws: “Until a agency intention announcement is revealed, a regulated firm that’s the topic of hearsay, hypothesis or a cautionary announcement revealed by a possible offerer, could presume that a suggestion in good religion shouldn’t be imminent until the regulated firm is consensually negotiating with a possible offeror.
“Caxton’s publications about the provide fall quick of the aforesaid, and could possibly be simply thought to be rumours or hypothesis that Mpact can legally ignore.
“The Frustrating Action Complaint brought by Caxton against Mpact is dismissed,” dominated Nikani.
Other rulings
However, referring to the definitions of “documents” and “affected transaction” and contemplating whether or not Caxton ought to have obtained approval earlier than the publication of its views and whether or not related publications in future have to be permitted, Nikani says the publications do relate to a suggestion.
He says the problem to be determined is whether or not Caxton breached laws for failing to acquire the approval of the TRP previous to publishing its publications, “more specifically, whether the publications fall within the definition of ‘documents’ in relation to ‘an affected transaction’”.
He says Caxton’s argument that related laws solely apply to paperwork regarding an “affected transaction” is flawed and dismisses Caxton’s defence that no provide has been made as but.
Caxton talked about in all of the publications and interviews that it’s going to solely be capable to make its provide as soon as it has obtained the approval of the competitors authorities.
Thus, it maintains that any paperwork don’t represent an affected transaction as a result of there is no such thing as a agency provide.
Nikani disagrees, now saying that Caxton’s discuss of a suggestion and no matter it publishes on the matter ought to be thought to be formal takeover discuss.
“Caxton’s argument appears to be based on a literal interpretation of Regulation 117 in terms of which only documents which relate to a live affected transaction (and not documents relating to a possible affected transaction) require the prior approval of the Panel,” says Nikani.
“Section 119(1) of the Companies Act thus requires the Panel to control any affected transaction or provide (together with any proposal, which if accepted would end in an affected transaction) to make sure the integrity of {the marketplace}, among the many different objections in Section 119 of the Companies Act.
“Furthermore, Section 119(2)(d)(i) of the Companies Act additionally requires the Panel to control the conduct of the events when an affected transaction is contemplated, which is previous to an affected transaction as outlined in Section 117(1)(c) of the Companies Act.
“In addition, there are numerous different provisions in our takeover legal guidelines which empower and require the Panel to control affected transactions even earlier than they mature into precise and reside affected transactions or affords.
“The interpretation superior by Caxton has the impact of limiting the Panel’s powers and regulation of affected transactions to solely when a proposed transaction has matured to being a reside affected transaction (i.e. adequate to make the method contemplated in Regulation 99 onwards).
“This interpretation undermines and limits the Panel’s ability to effectively regulate affected transactions in accordance with its mandate and objectives as set out in Section 119 of the Companies Act,” says Nikani.
The TRP dominated that each one paperwork regarding an affected transaction, together with people who relate to potential transactions, fall inside the jurisdiction of the panel and ought to be permitted earlier than publication.
Gagged
Lastly, the TRP successfully gagged Caxton by upholding the grievance introduced by Mpact in opposition to Caxton and prohibiting Caxton “from making any further public statements/announcements in any form and on any platform about the acquisition of Mpact without the approval of the Panel”.
Nikani says any individual issued with a ruling could apply to the Takeover Special Committee for a listening to relating to the ruling.
Caxton has already indicated that it’s going to take the ruling on enchantment.
Listen to either side of the Caxton vs Mpact spat (or learn the transcript of the interview with Mpact CEO Bruce Strong right here and Caxton chair Paul Jenkins right here):
Disclosure: Caxton’s majority shareholders are additionally majority shareholders in African Media Entertainment (AME), the proprietor of Moneyweb.
