EOH boardroom drama
A cryptic EOH SENS notice on Friday sparked speculation that a boardroom brawl may be brewing at the technology service provider.
EOH informed shareholders that it “has been approached by certain shareholders regarding the succession plan for the board”.
“The board is engaging further with the shareholders. Pending further announcements, shareholders are advised to exercise caution when dealing in EOH securities,” it said.
The announcement came less than an hour after the company announced Jesmane Boggenpoel had resigned with immediate effect.
Boggenpoel is a managing partner at private equity fund AIH Capital and served on the EOH board since 2019.
EOH did not provide a reason for her resignation. It also did not say which shareholders approached the board or what is meant by a “succession plan for the board.”
However, shareholder upheaval is not unexpected. They have lost a lot of money, and EOH has no clear growth path.
The last five years have been a trying time for EOH as former CEO Stephen van Coller tried to steady the ship.
When Van Coller took the reins, the share price was on a downward trend. It traded at R40 per share, well below its highs of over R100 two years earlier.
The company was under pressure because of its growing debt burden, reports of corruption and mismanagement, and poor corporate governance.
He was there to fix the problems created by his predecessors while growing the company and creating shareholder value.
He focused on two things: addressing corruption at EOH and reducing debt. He succeeded admirably in both departments.
However, it came at a price. Shareholders lost most of their money, and he sold many of the crown jewels to repay the banks.
Shareholders also had to fork out a lot of money in a rights issue in 2023 or face significant dilution.
Following the rights issue, Van Coller introduced a new strategy and welcomed a new era for EOH, dubbed EOH 2.0.
Van Coller added that the company was now well-positioned to make significant investments in the growth of the business.
At the time, the share price was around R1.70, and shareholders were upbeat that the time for growth had come after years of pain.
However, this did not happen. EOH continued to deliver disappointing results, and the share price plummeted to R1.05.
To add to shareholder pain, both Van Coller and CFO Megan Pydigadu resigned and left the company over the last year.
EOH chair Andrew Mthembu took over running the company as acting CEO on 1 April 2024, with the search for a permanent chief executive ongoing.
It is, therefore, no surprise that shareholders are looking for stability and a clear path to growth for the struggling IT firm.
However, it may not be all bad. Earlier this month, EOH announced that Peresec pumped money into EOH and now holds 5.06% of the company’s ordinary shares.
After this significant investment, Peresec may be looking to strengthen the board and create stability at the company to bolster its performance.
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