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SAFARI INVESTMENTS (RSA) LIMITED - Changes to the Board of Directors

Release Date: 22/06/2020 10:39
Code(s): SAR     PDF:  
 
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Changes to the Board of Directors

SAFARI INVESTMENTS RSA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2000/015002/06
Share code: SAR
ISIN: ZAE000188280
(Approved as a REIT by the JSE)
(“Safari” or “the Company” or “the Group”)

CHANGES TO THE BOARD OF DIRECTORS

Safari shareholders are referred to the company's announcement on SENS on
21 November 2019 in which shareholders were advised of the appointment of Mr Tinus
Slabber and Etienne Swanepoel as independent non-executive directors of the company. As
noted in the announcement, both Messrs Swanepoel and Slabber are (inter alia) highly
experienced corporate lawyers, and independent of Safari and its shareholders.

In line with the wishes of the above-mentioned shareholders, Mr Slabber was also
subsequently appointed by the Board as the company's independent Chairman on
17 December 2019 (with effect 1 January 2020), following the resignation of Dr Snyman.

Messrs Slabber and Swanepoel were identified and proposed by, and - following due
governance processes - appointed to the Safari board at the express request of, Bridge Fund
Managers Proprietary Limited ("Bridge"), Stanlib Asset Management Proprietary Limited and
certain minority shareholders who were frustrated with the developments relating to the
unsolicited offer from Community Property Company Proprietary Limited failing to proceed. At
the time, these shareholders wanted the Safari board to have, and be led by, experienced,
wholly-independent directors. This request was fully supported by the Safari board, and the
proposed directors appointed. Messrs Slabber and Swanepoel have thereafter actively and
fully discharged this independent role and function, and, among others, served, together with
Mr C Roberts, as the independent committee constituted by the board to deal on its behalf
with the unsolicited takeover approach by Heriot REIT Limited ("Heriot").

On 15 June 2020, Bridge, Heriot Investments Proprietary Limited (the controlling shareholder
of Heriot), SA Corporate Real Estate Limited ("SA Corporate"), I Group Proprietary Limited
and Messrs Pine Pienaar, Francois Marias and Albie Cilliers addressed a letter to Safari
requiring the immediate resignation of all of the directors of Safari, other than the CEO and
FD, being the management (executive) directors, and proposed and requested the
appointment of Mr Steven Herring (who was proposed to be the company's new non-executive
chairman), Mr Greg Heron (proposed to be the lead independent director) and Messrs James
Templeton, Pine Pienaar and Oratile Mosetlhi (collectively, the "Proposed Directors").

Mr Herring is the founder of Heriot, is its current non-independent non-executive chairman and
is a beneficial shareholder in respect of 234 036 220 of Heriot's shares, representing
approximately 86.9% of its issued shares (as at 28 June 2019, per the company's
2019 Integrated Annual Report).

The letter states that the signatories thereto "own and/or represent and/or are able to speak
for" the following shares and shareholders (as referred to in the letter, the
"Concerned Shareholders"):

  NAME                                                        NUMBER OF SHARES
  SBSA ITF NGI Inv Property Fund                                                      29,891,000
  FRB ITF Bridge Managed Growth Fund                                                  13,500,000
  FRB ITF Bridge Stable Growth Fund                                                    7,900,000
  FRB ITF Bridge High Income Fund                                                      2,000,000
  Grinrod Pension Fund                                                                 1,069,997
  FRB ITF Bridge Balanced Fund                                                           600,000
  FRB ITF Bridge Institutional Prop Income                                               620,000
  Heriot Investments Proprietary Limited                                              31,384,000
  Reya Gola Proprietary Limited                                                          737,395
  SA Corporate Real Estate Limited                                                    20,000,000
  I Group Proprietary Limited                                                         12,446,805
  Dream World Investments 77 Proprietary Limited                                       1,987,285
  Nyeleti Investment Trust                                                             1,621,980
  PA Pienaar                                                                              87,000
  Safarihold Proprietary Limited                                                       5,500,000
  Safarihold No. 2 Proprietary Limited                                                 3,634,881
  Breeds Coalitions Proprietary Limited                                                1,000,000
  Pershing LLC                                                                         1,802,552
  Abraham Albertus Cilliers                                                              500,000
  Janine Cilliers                                                                         30,000
  Cilliers Family Trust                                                                   35,000
  Total number of shares                                                             136,247,893

To establish a clear factual basis for communications to Safari shareholders and other relevant
persons, and as good practice, the Concerned Shareholders have been requested to provide
supporting documents confirming the statements reflected above. Pro tem, and for the
purposes of this announcement, Safari is proceeding on the good faith basis that these
statements will be confirmed, as requested.

The shares so owned, or stated to be represented or spoken for, amount in aggregate to
c. 52,84% of the company's shares, if the shares of Southern Palace Capital Proprietary
Limited ("Southern Palace Shares") are excluded from the voting universe, and 43.8% if such
shares are included in the calculation. The company understands, from unsolicited
communications received that certain Concerned Shareholders are in fact not or no longer in
support of the proposal, and intend to withdraw support for the proposal. If so, this will reduce
the level of support. Irrespective of the exact level of shareholder support for the proposal,
this SENS reflects the company's in principle position in respect of the approach and the
demands reflected therein.

The letter further states that, if the directors do not resign, the Concerned Shareholders will
call a meeting of shareholders under s 61(3) of the Companies Act, 71 of 2008 ("Companies
Act"), pursuant to which "inter alia the removal of the directors (as identified above) will be
pursued". The appointment of the directors nominated by the Concerned Shareholders is also
expected to be pursued at such meeting.

The reason stated for this demand is the "conclusion (by the Concerned Shareholders) that
the board of Safari is not optimally structured and that certain individuals on the Board are not
suitable to the role of acting in the interests of stakeholders, especially shareholders". It is not
stated in what respects the present board structure is defective, or which directors are believed
to be unsuitable to act in the interests of shareholders. The structure of the board proposed
by the Concerned Shareholders comprises predominantly (potentially, entirely) non-
independent directors, and has as its proposed chairman the founder, non-independent
chairman and ultimate controlling shareholder of Heriot, a competing REIT, which company
wishes to obtain a controlling interest in Safari.

Notwithstanding the stated desire for wholly independent directors to be appointed to, and to
lead, the Safari board, and, as noted above, this wish being fully given effect to, the
shareholders supporting the demand include certain of the shareholders who nominated
Messrs Slabber and Swanepoel to the board. In the light of the fact that Messrs Slabber and
Swanepoel were not elected to the board by shareholders but were appointed by the board at
the specific request of a group of shareholders, each has taken the principled approach that
they should therefore not remain in office in conflict with the basis for their appointment, and
have accordingly resigned with effect from 21 June 2020. Whilst respecting such decision,
the board wishes to express its sincere regret at the resignations, as both directors proved to
be truly independent, are highly skilled in corporate matters and brought to the board
necessary skills in relation to, amongst others, takeovers and other major corporate
transactions.

Messrs Slabber and Swanepoel have both expressed their willingness to again serve on the
board, should a majority of shareholders elect them to this position, and the board would
welcome such appointments. Both Messrs Slabber and Swanepoel have also advised that
they are in full accord with this announcement, and wish to record that they do not consider
the proposed takeover of the board in this manner, and in these circumstances, to be in the
best interest of the company.

Mr AE Wentzel has assumed the chairmanship of the board on an interim basis, pending
appointment of further directors to the board.

In relation to the wider request to re-constitute the board, the board has responded to the
Concerned Shareholders and advised that it is fully supportive of the board being appropriately
re-constituted and/or supplemented, in an orderly manner and with appropriate shareholder
support, such that it comprises directors who collectively represent all of the company's
shareholders (not just the Concerned Shareholders), and remains constituted consistent with
principles of good governance and in compliance with the requirements of King IV, the JSE
Listing Requirements and the company's memorandum of incorporation ("MOI"). Inter alia, it
is required that the board comprises a majority of non-executive directors, of whom the
majority are independent, and that all directors are and remain independent of competitors to
the company. Any shareholder who is committed to principles of good governance and who
genuinely has the interests of the company as a whole at heart will fully support a board
constituted in accordance with these principles and the provisions of the MOI.

The changes which the Concerned Shareholders seek to effect to the composition of the board
of directors (taken as a whole) fall short of these requirements, and prima facie are directed
at ensuring that a takeover of Safari by Heriot is effected, irrespective of the cost to the
company. The board will not countenance or facilitate this.

The board has in particular, and amongst others, advised the Concerned Shareholders that:
    • the proposed appointments of Messrs Herring, Templeton and Mosetlhi would breach
      paragraph 24.6 of the company's MOI which requires that directors must be
      independent of competitors of the company, if so determined by the board. The
      standing, generally applicable policy of the board is not to allow such appointments to
      the board;
    • these proposed appointments, being all non-independent directors, would (when
      taken with the other proposed appointments) also render the board, and certain of its
      committees (notably, the audit committee), to be constituted in conflict with the
      requirements of King IV and the JSE Listings Requirements;
    • as such, these appointments are not supported by the board;
    • the Concerned Shareholders have accordingly been invited to propose suitable
      alternative nominees for consideration to enable the board to be validly constituted in
      line with the aforementioned principles and provisions of the MOI, and the
      Nominations and Remuneration Committee has offered to work together with the
      Concerned Shareholders to achieve this;
    • any resolution proposed to force the removal or appointment of directors which is in
      conflict with the aforementioned principles and/or provisions of the MOI will not be
      supported and, if necessary, will be opposed.

To avoid any perception that the board is generally hostile to changes to its composition, which
it is not, the board has offered to effect, on an expedited basis, the appointment of
Messrs G Heron and P Pienaar to the board, subject to receiving appropriate information and
documents customary for such process, and subject to the customary formal process and
confirmatory review and consideration thereof by the Nominations and Remuneration
Committee. The proposal by the Concerned Shareholders did not contain any details of the
Proposed Directors (other than their names), or any documents or information required by any
properly undertaken appointment process (including letters consenting to appointment and
Schedule 13 director declarations required under the JSE Listings Requirements). This
information and documentation has been requested from the Concerned Shareholders and
the Proposed Directors. Shareholders will be advised in due course upon such appointments
being effected.

The Concerned Shareholders have also been advised, and kindly requested to take into
account, that the company is in the process of finalising its annual report and financial
statements, and that any changes to the composition of the audit committee prior to this
process being completed will be highly disruptive. As such, the recommendation to the
Concerned Shareholders is to look to bring further changes to the board only after this process
has concluded. The most logical and efficient time would be the company's upcoming annual
general meeting, but select earlier appointments can be considered, if necessary. The board
had identified the rotational retirements of the AGM as an opportunity to improve the diversity
on the board (in particular, racial and gender diversity), and the Concerned Shareholders are
requested to have this goal in mind when making board recommendations.

The board also continues to progress the appropriate way forward in respect of the Southern
Palace Shares, as announced on SENS 4 May 2020. As such, the board is actively working
on how best to accrue the effective value of the Southern Palace Shares to all Safari
shareholders, and in particular, among others, the board (assisted by appropriate professional
advice) is evaluating the proportionate distribution of such shares to shareholders through a
dividend in specie or other means. Material changes to the board may adversely impact this
process.

To facilitate the transition of the board, following their appointment, Messrs Heron and
Pienaar are invited to attend all committee meetings, including those of the audit committee.
The directors will also be provided with a detailed induction and history of the takeover
approaches to the company, including that of Heriot.


Pretoria
22 June 2020
Sponsor
PSG Capital

Date: 22-06-2020 10:39:00
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