The Telkom board’s proposal to provide directors with general authority to issue shares for cash has been refused by investors who voted on the resolution at the company’s annual general meeting on 10 September 2020.
“All resolutions, except for Special Resolution No. 1, were passed by the requisite majority of Telkom shareholders present in person or represented by proxy at the AGM,” Telkom said in a statement to investors published directly after the meeting.
Special Resolution No. 1 refers to a vote on the general authority for directors to issue shares for cash.
73.81% of shareholders voted to support this resolution, with 26.19% voting against the proposal.
Ahead of the meeting, Telkom’s board said that it wanted to increase the share issuance threshold from 5% to 10%, adding that this did not mean it would issue shares.
“In the upcoming AGM, the board is requesting to increase the threshold from 5% to 10%,” Telkom said in a statement to investors at the beginning of the month.
“Although the board does not expect to issue shares, they have taken a view to increase the threshold to provide the board agility and flexibility to enable an effective post-COVID-19 response, should this be necessary.”
No intention to issue shares
The company stated it has no intention to conduct a rights issue, but added that if it did so, it would inform all shareholders.
“Shareholders are advised that Telkom has no intention to do a rights issue,” Telkom said.
“In the unlikely event where the board takes a decision to issue shares, an official announcement through the JSE Stock Exchange News Services (SENS) will be issued to inform all shareholders.”
Telkom said it remains comfortable with its balance sheet, which shows a net debt-to-EBITDA of 0.7x as reported for the period 31 March 2020.
“The board would like to reiterate that the amendment of the resolutions is not an expression of Telkom’s intention to issue shares to the market,” Telkom said.
Despite this assurance, the proposal to increase the share issuance threshold was refused, with not enough shareholders voting in favour of the resolution for it to pass.
New board members
Telkom recently appointed a number of new board members, with independent non-executive directors Santie Botha and Khanyisile Kweyama set to retire from the board with effect from 25 September and 31 December 2020, respectively.
They will be replaced by Alphonzo Samuels and Hemmanth Singh, who will take up their respective posts as non-executive director and independent non-executive director.
Singh will begin his tenure on 25 September 2020, while Samuels will start his term on 1 January 2021.
Samuels previously helmed Telkom’s Technology and Openserve leadership team for six years, before his retirement on 31 March 2020.
Herman Singh holds an MBA, BSc. Mechanical Engineering and a Graduate Diploma, Industrial Engineering from the University of Witwatersrand.