Drama at EOH

EOH has been in turmoil over the last year, losing its chief executive, chief financial officer, executive chairman, and many established board members.

On Friday, EOH announced that Andrew Mthembu has resigned as a director and from his position as executive chairman and interim CEO.

Fatima Newman has stepped down as an executive director but will remain in her capacity as EasyHQ chief executive.

Another EOH board member, Bharti Harie, has resigned as an independent non-executive director.

These resignations followed shareholders approaching EOH regarding the board’s succession plan.

EOH has appointed Marius de la Rey as the company’s new executive chairman and interim CEO.

De la Rey is the current chief executive officer of the company’s largest segment, iOCO South Africa.

He was involved in EOH’s restructuring and has been on the company’s executive committee since 2019.

Before joining EOH, De la Rey spent five years at Absa as CEO of distribution coverage and customer channels.

He also spent five years at Standard Bank as head of group real estate and head of channel development.

De la Rey said he is excited to be leading EOH through the next part of its journey.

EOH has also appointed three new independent non-executive directors — Veronica Motloutsi, Dennis Venter, and Rhys Summerton.

Motloutsi is the founder and CEO of SmartDigital Solutions, a company specialising in digital transformation.

She serves as a non-executive director at Sentech and the deputy chairperson of the .za Domain Name Authority and VulaTel.

Venter founded Quarry Cats and Atoll, which offered services to the construction and mining industries. He currently oversees a diversified investment portfolio.

Summerton is the founder and investor at Milkwood Capital, a long-term, value-oriented, global investment company based in Windsor, United Kingdom.

He is on the Nasdaq-listed Nexxen International board and the boards of other unlisted investment companies.

Setting the scene

Former EOH CEO Stephen van Coller

To understand the drama at EOH, it is important to go back to 1 September 2018, when Stephen van Coller took the reins as CEO.

At the time, the EOH share price was on a downward trend. It traded at R40 per share, well below its highs of over R100 two years earlier.

Van Coller’s mandate was creating value by growing EOH and creating jobs. Shareholders were tired of losing money.

However, a group of former directors and executives said banks had parachuted in Van Coller, a former banker, to ensure they got back the money EOH owed them.

The company was under pressure because of its growing debt burden, reports of corruption and mismanagement, and poor corporate governance.

Van Coller took aim at corruption and poor corporate governance at EOH and focused on reducing debt.

He sold many of EOH’s business units, including Sybrin, CCS, and LSD, and used this money to repay the banks.

EOH also raised R600 million through a R500 million rights issue and a R100 million BBBEE deal in early 2023.

The proceeds of the February 2023 capital raise were used to settle the majority of EOH’s senior bridge facility.

The banks received their money through EOH selling businesses and the rights issue, and EOH’s debt was significantly reduced.

Van Coller said he was very proud that EOH never missed an interest payment and that the banks got all their money.

He added that the successful rights issue welcomes a new era for EOH, knowing that their strategy for EOH 2.0 has the backing of all their shareholders and lenders.

Shareholders, who saw over 90% of their wealth disappear since Van Coller took the reins, were ready to see the growth Van Coller promised.

EOH 2.0 is not delivering, and the management team left

Former EOH CFO Megan Pydigadu

When the rights offer was announced, EOH traded at R4.28 per share. Shareholders were offered 227 additional shares for every 100 held for R1.30 per share.

At the first announcement of the rights offer, the theoretical breakeven price for the share after the rights offer was completed would be R2.20.

In February 2024, a year after the rights offer, the EOH share price declined to R1.05 per share. The EOH 2.0 promises did not come to fruition.

EOH’s loss for the six months through January 2024 widened by over 1,600%. The company’s loss per share deepened from 3 cents to 15 cents.

The company’s problems went beyond its financials. Van Coller and EOH CFO Megan Pydigadu resigned and left the company.

Van Coller, with Pydigadu as his right-hand woman, ran a tight ship. Their departure left a leadership vacuum.

No clear succession plan was in place, so EOH appointed its chairman, Andrew Mthembu, as interim CEO.

However, this did not work out as expected, and EOH’s shareholders grew impatient. They wanted to start seeing the promised returns.

On 10 May 2024, EOH announced that it “had been approached by certain shareholders regarding the succession plan for the EOH board”.

It said that it was engaging further with the shareholders and that it would make an announcement soon.

That announcement came on 31 May 2024, when EOH announced sweeping changes to the board.

It also replaced Mthembu as interim chief executive and chairman and announced that Jabu Moleketi was the new chairman.

EOH is still looking for a permanent chief executive officer.