Telkom’s ‘golden share’ legacy ruffles feathers on the JSE
Rob Rose
Chief Reporter
A CLASH looms between the JSE and Telkom over the special “golden share” in the listed telecoms company, which it emerged yesterday is now in the hands of the state-owned Public Investment Corporation (PIC).
The golden share entitles its holder to special rights not held by other Telkom shareholders, including the right to appoint directors.
The continued existence of the golden share contravenes JSE rules, and also appears to be at odds with the impression created when Andile Ngcaba’s Elephant Consortium bought 6,7% of Telkom from the PIC in a controversial black empowerment deal in May.
PIC advisers gave the impression then that the golden share, which had belonged to the foreign Thintana consortium that held a 15% stake in Telkom, had lapsed.
But Telkom’s report to the US Securities and Exchange Commission last Friday disclosed that the golden share still exists — and is in the hands of the PIC — which now owns 14% of Telkom.
The JSE initially allowed this breach of its rules to accommodate Thintana, but the golden share was expected to fall away when Thintana sold its Telkom stake to the PIC in November.
Had the PIC not stepped in when Ngcaba ran short of money to buy the stake, the golden share could have reverted to Ngcaba.
JSE head of listings John Burke said yesterday the exchange was “in discussions with Telkom” as the situation was “far from ideal”.
The JSE is concerned that the structure prejudices ordinary Telkom shareholders.
The JSE met Telkom last week, but there has been no resolution.
Telkom corporate affairs executive Belinda Williams said yesterday that because only 8,4% of the PIC’s shares were linked to the golden share, most of the original rights had fallen away, and would not apply to the PIC’s other 6%, bought separately on the market.
Thintana’s original golden share rights allowed it to veto any change of Telkom’s business plan or dividend policy.
“Because the (PIC’s) share has fallen below 15%, the only major right left is for the PIC to appoint directors,” she said.
Williams conceded that the arrangement went “against corporate governance principles of equal shareholder rights, but at least the golden share rights now with the PIC have been partly diluted”.
The only way to cancel the golden share before it expires in 2011 is for government to agree to amend Telkom’s constitution.
In March the PIC announced it would keep 5% for itself, Elephant would get only 6,7%, and another 3,2% would remain with the PIC while it looked for a new empowerment shareholder.
Rob Rose
Chief Reporter
A CLASH looms between the JSE and Telkom over the special “golden share” in the listed telecoms company, which it emerged yesterday is now in the hands of the state-owned Public Investment Corporation (PIC).
The golden share entitles its holder to special rights not held by other Telkom shareholders, including the right to appoint directors.
The continued existence of the golden share contravenes JSE rules, and also appears to be at odds with the impression created when Andile Ngcaba’s Elephant Consortium bought 6,7% of Telkom from the PIC in a controversial black empowerment deal in May.
PIC advisers gave the impression then that the golden share, which had belonged to the foreign Thintana consortium that held a 15% stake in Telkom, had lapsed.
But Telkom’s report to the US Securities and Exchange Commission last Friday disclosed that the golden share still exists — and is in the hands of the PIC — which now owns 14% of Telkom.
The JSE initially allowed this breach of its rules to accommodate Thintana, but the golden share was expected to fall away when Thintana sold its Telkom stake to the PIC in November.
Had the PIC not stepped in when Ngcaba ran short of money to buy the stake, the golden share could have reverted to Ngcaba.
JSE head of listings John Burke said yesterday the exchange was “in discussions with Telkom” as the situation was “far from ideal”.
The JSE is concerned that the structure prejudices ordinary Telkom shareholders.
The JSE met Telkom last week, but there has been no resolution.
Telkom corporate affairs executive Belinda Williams said yesterday that because only 8,4% of the PIC’s shares were linked to the golden share, most of the original rights had fallen away, and would not apply to the PIC’s other 6%, bought separately on the market.
Thintana’s original golden share rights allowed it to veto any change of Telkom’s business plan or dividend policy.
“Because the (PIC’s) share has fallen below 15%, the only major right left is for the PIC to appoint directors,” she said.
Williams conceded that the arrangement went “against corporate governance principles of equal shareholder rights, but at least the golden share rights now with the PIC have been partly diluted”.
The only way to cancel the golden share before it expires in 2011 is for government to agree to amend Telkom’s constitution.
In March the PIC announced it would keep 5% for itself, Elephant would get only 6,7%, and another 3,2% would remain with the PIC while it looked for a new empowerment shareholder.
