Thom Mclachlan
19 March 2008
Johannesburg — A STRONG vote of confidence from shareholders yesterday means Avusa is free to unbundle its 33,6% stake in Caxton and list it as a separate company named ElementOne.
Avusa CEO Prakash Desai looked satisfied after 85% of shareholders voted in favour of his plan to sell of the stake. Two years of negotiations for a merger between Avusa and Caxton had failed.
The split will allow Avusa to negotiate printing contracts on a more commercial basis.
On March 31 Avusa will list with only its operating media assets, while ElementOne will list with the stake in Caxton as its only asset.
As this places ElementOne in conflict with JSE rules, the company has been given 12 months to either sell its shares in Caxton or acquire further assets.
Regarding the future strategy of the business, Desai said, "Without this large number of shares (held in Caxton) Avusa can now focus on the operating media assets.
"We have a young team and the best brands in media, (and the) black economic empowerment homework has already been done."
The separate listing provides a clear path for empowerment company Mvelaphanda Group to acquire Allan Gray's 30% stake in Avusa.
However, Avusa ha d said it was looking at implementing an empowerment structure in addition to this.
Mvela would take 25,1% of Avusa, leaving 4,9% to what it terms "associates". If indications from the board are anything to go by, Mvela's presence is long term.
The board said it would make way for three new members from Mvela Group , while Allan Gray was given a seat for only one board member in the old structure, despite its 30% shareholding.
Mvela is expected to nominate CEO Yolanda Cuba, Mvela deputy executive chairman Mikki Xayiya and chief investment officer Mark Wilcox to the board.
One analyst who did not support the deal said the move was good for management but not for shareholders, who would be burdened with offloading Caxton shares.
He also queried why institutional shareholders supported the deal.
"I understand why Allan Gray would support it, but not the others , unless Mvela has given them assurances it would buy their interests at the same price as it did from Allan Gray."
Analysts value Avusa's media operating assets at R1,7bn.
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