Texton: Did they really think turkeys vote for Christmas?
This wasn’t even close: 100% of shareholders said no to the bizarre proposal to buy back shares from the PIC
How appropriate was it that Texton’s shareholder meeting to vote on the buyback of shares from the Public Investment Corporation (PIC) took place just three days after Christmas?‘’
This was indeed a case of expecting turkeys to vote for Christmas. And guess what? They didn’t.
On December 28 the Texton shareholders voted overwhelmingly not to approve the board’s decision to buy the BEE shares back from the PIC. This wasn’t a close affair; 100% of Texton shareholders said “no” to the bizarre proposal.
The proposal would have obliged Texton to buy back about 50 million shares held by BEE shareholders who had been financed by the PIC back in 2014 when Texton was trading at R11.40. In terms of the deal that the PIC believed it had with Texton and the BEE shareholders, the repurchase would have to be done at R11.40. (Texton traded at a high of R4.80 on Monday.)
It would of course have been great for the PIC to get all R580m of its money back, but how was it possible that the Texton board ever agreed to buy back the shares?
And, even more bizarre, having agreed to buy back the shares it then stipulated that shareholders would have to approve the buyback. Surely even in 2014 it was evident that if the PIC ever wanted to force the company to repurchase the shares at about R11.40 it could be only because it couldn’t sell them in the market at that price.
It’s also bizarre that the PIC imposed such harsh terms on the BEE shareholders and their Texton partners.
The whole mess now looks as if it is heading for court, which is disappointing. Texton looks like a fundamentally good business albeit in the currently difficult area of property. Of course, it doesn’t help that the group is now on its fourth CEO in as many years.