http://www.finance24.com/Finance/Companies/0,,1518-24_1618230,00.html
'No wrong' in Telkom buy-back
09/11/2004 15:44 - (SA)
Donwald Pressly
Cape Town - Telkom's chief executive officer Sizwe Nxasana told parliamentarians on Tuesday there was "nothing untoward" in his company's policy of being able to buy back up to 20% of its own shares as it increased the value of the remaining shares for all shareholders.
This follows the emergence of a consortium - led by former communications department director general Andile Ngcaba, ruling ANC spokesman Smuts Ngonyama and Transnet finance director Glora Serobe - as buyers of the remaining 15.1% stake in Telkom from the Thintana consortium.
Responding to Inkatha Freedom Party MP Suzanne Vos who asked whether such an action could be justified in the context that it could "ramp up" the Thintana shares, he said the decision had been taken at the AGM in January - and confirmed at a general meeting three weeks ago - for the company "to buy back up to 20% of our issued shares".
He told MPs there was "nothing wrong with that" as the buy-back programme was the same as paying a dividend. He said if the company was generating cash and paid dividends it would attract secondary tax on companies which stood at 12.5%.
Addressing a National Assembly communications portfolio committee meeting, Nxasana said the board set a limit on the price "so that we are not overpaying" for the shares with the intention to cancel those shares "to result in fewer shares that are in issue".
The effect would be to enhance the value of all the shares.
"Now we have a smaller number of shareholders still participating in a company with a market capitalisation that is growing," he said.
He noted that government owned 38% of its shareholding.
Referring to an article in Noseweek entitled "Enron's in at Telkom" he said it seemed to suggest that something "untoward" had been done. This was not true, he said.
The article said the Companies Act prohibited a company from assisting in financing the purchase of its own shares.
NoseWeek noted that Thintana paid just R29 a share for its 30% original holding in Telkom in 1997. It also noted that Telkom's share price was up to the low R70s making Thintana "an excellent investment".
NoseWeek noted that within days of getting its special resolution registered in March - which Nxasana said had been passed by 95% of shareholders - a wholly-owned Telkom subsidiary named Rossal No 65 purchased 3 185 736 Telkom ordinary shares at an average price of R74.58.
It reported further that Acajou, another subsidiary, bought millions of Telkom shares in June. It reported that Telkom had bought R1.7bn worth of shares by September 9.
Telkom's share price hit an all-time high on Tuesday of R95 a share.
At 15:20 it was quoted at R92.10 - 7% or R6.00 up on Monday's closing price.
<b>The only thing I see as a problem is if this 15.1% still enjoys the same Managerial Control as it did with Thintana in the shareholder agreement. Well as I don't know I cannot say. Also if Mr Naidoo is still involved then this would indicate that this is true and he knows what is in this Secret Shareholders Agreement.
Disclaimer: This is my own personal view and not necessarily the views of MyADSL.
</b>
<b><hr noshade size="1"></b><font size="2"><font color="red"><b>You can take Telkom out of the Post Office but you can't take the Post Office out of Telkom.</b></font id="red"></font id="size2">
'No wrong' in Telkom buy-back
09/11/2004 15:44 - (SA)
Donwald Pressly
Cape Town - Telkom's chief executive officer Sizwe Nxasana told parliamentarians on Tuesday there was "nothing untoward" in his company's policy of being able to buy back up to 20% of its own shares as it increased the value of the remaining shares for all shareholders.
This follows the emergence of a consortium - led by former communications department director general Andile Ngcaba, ruling ANC spokesman Smuts Ngonyama and Transnet finance director Glora Serobe - as buyers of the remaining 15.1% stake in Telkom from the Thintana consortium.
Responding to Inkatha Freedom Party MP Suzanne Vos who asked whether such an action could be justified in the context that it could "ramp up" the Thintana shares, he said the decision had been taken at the AGM in January - and confirmed at a general meeting three weeks ago - for the company "to buy back up to 20% of our issued shares".
He told MPs there was "nothing wrong with that" as the buy-back programme was the same as paying a dividend. He said if the company was generating cash and paid dividends it would attract secondary tax on companies which stood at 12.5%.
Addressing a National Assembly communications portfolio committee meeting, Nxasana said the board set a limit on the price "so that we are not overpaying" for the shares with the intention to cancel those shares "to result in fewer shares that are in issue".
The effect would be to enhance the value of all the shares.
"Now we have a smaller number of shareholders still participating in a company with a market capitalisation that is growing," he said.
He noted that government owned 38% of its shareholding.
Referring to an article in Noseweek entitled "Enron's in at Telkom" he said it seemed to suggest that something "untoward" had been done. This was not true, he said.
The article said the Companies Act prohibited a company from assisting in financing the purchase of its own shares.
NoseWeek noted that Thintana paid just R29 a share for its 30% original holding in Telkom in 1997. It also noted that Telkom's share price was up to the low R70s making Thintana "an excellent investment".
NoseWeek noted that within days of getting its special resolution registered in March - which Nxasana said had been passed by 95% of shareholders - a wholly-owned Telkom subsidiary named Rossal No 65 purchased 3 185 736 Telkom ordinary shares at an average price of R74.58.
It reported further that Acajou, another subsidiary, bought millions of Telkom shares in June. It reported that Telkom had bought R1.7bn worth of shares by September 9.
Telkom's share price hit an all-time high on Tuesday of R95 a share.
At 15:20 it was quoted at R92.10 - 7% or R6.00 up on Monday's closing price.
<b>The only thing I see as a problem is if this 15.1% still enjoys the same Managerial Control as it did with Thintana in the shareholder agreement. Well as I don't know I cannot say. Also if Mr Naidoo is still involved then this would indicate that this is true and he knows what is in this Secret Shareholders Agreement.
Disclaimer: This is my own personal view and not necessarily the views of MyADSL.
</b>
<b><hr noshade size="1"></b><font size="2"><font color="red"><b>You can take Telkom out of the Post Office but you can't take the Post Office out of Telkom.</b></font id="red"></font id="size2">
)]