Activist shareholders of gold and nickel miner Mwana Africa have forced the convening of an extraordinary general meeting on June 9 where four non-executive directors could be ejected through a vote, bringing a simmering board dispute to a head.
The Mwana board, while acceding to the EGM, have recommended that shareholders vote against the proposed resolutions to dismiss the non-executive directors.
Minority shareholders, calling themselves the ‘Concerned Shareholders Group’, led by Ian Dearing and others holding about 5.1 percent of Mwana’s issued share capital want interim non-executive chairman Stuart Morris, Johan Botha, Ngoni Kudenga and Herbert Mashanyare to be removed from the board to be replaced by Scott Morrison, Mark Wellesley-Wood, Oliver Barbeau and Anne-Marie Chidzero.
South Africans Morris, the interim non-executive chairman, and Botha have indicated that they will quit before the EGM, leaving Zimbabweans Mashanyare and Mwana veteran Ngoni Kudenga in the line of fire.
The directors are independent from Mwana’s largest shareholder China International Mining Group Corporation (CIMGC) and its chairman Yat Hoi Ning who jointly control 15 percent of Mwana and have a separate petition before the courts to contest their appointment at last year’s annual general meeting.
The petition has since been suspended until June 15 this year to enable the parties to reach an agreement while last week, Mwana reported that the two parties had sold off nearly half of their holdings in the group.
According to the requisition for the EGM, the minorities are alleging failed corporate governance at the company, the legal dispute with CIMGC and Ning and the poor performance of Mwana’s share price as grounds for a change in the board.
“Shareholders have invested in excess of £200m to fund the Company’s operations and acquire assets since its inception. The Company’s current market value is approximately 10-15 percent of this investment,” the requisition reads.
“When a company underperforms so badly, shareholders should have the right to call board members to account.”
Wellesley-Wood was removed as chairman in February last year, five months after succeeding Oliver Baring who retired in September 2013. The Mwana board said Wellesley-Wood did not fit into Mwana’s corporate culture, nor share the company’s strategic vision, hence his short-lived stint on the board.
“Following this unanimous decision, the Board does not believe that reappointing Mr Wellesley-Wood to the Board to be in the best interests of the Company,” Mwana said in a circular to shareholders.
It also contends that the new directors proposed by the requisitioners do not have a comparable breadth of experience of operating in Southern Africa or operational track record to the incumbent directors they are seeking to replace.
“Given that Mwana operates in Zimbabwe, a country with an increasing focus on indigenous participation, the Directors firmly believe it is critical to have a Board with the right mix of credentials, with on the ground experience and with significant local networks of contacts that are of benefit to the Company,” the company said.
“In addition both Mr Ngoni Kudenga and Mr Herbert Mashanyare provided invaluable advice to the Board during the recent successful launch of the $20 million bond to Zimbabwe institutions and have already contributed important inputs to the Audit a and Risk and Technical committees on which they serve.”
With Morris and Botha quitting, Mwana said it has a “sensible and appropriate succession planning” in place which will be implemented following a satisfactory outcome to the petition by CIMGC and Ning.
It urged shareholders to reject the proposals.- The Source