The submission by Sekunjalo Independent Media Consortium to the Competition Commission detailing why it should be allowed to buy the Independent News and Media South Africa group has already seen the major newspaper players start sniping at each other.
Media owners and pundits are concerned that Dr Iqbal Surve’s consortium has been less than upfront over just who is funding the buyout of INMSA from its Irish owners. INMSA of course holds titles to 18 newspapers in South Africa, including The Star, the Cape Times, the Cape Argus, Pretoria News and the best-selling Isolezwe.
The Media Workers Association of South Africa has made a submission to the Competition Commission, saying it has the group’s employees’ interests at heart. It too has questioned secrecy around funding, saying it was of concern to them that “Sekunjalo has chosen to keep the details of its shareholders confidential. These details might have given some insight into the ability of Sekunjalo to back its objectives for the transaction and its commitment regarding no retrenchments”.
“In general Mwasa is quite disturbed by what appears to be a rather contemptuous approach to engagement with INMSA’s staff by both the company and Sekunjalo, as reflected in the notification received by Mwasa. To the extent that it makes it impossible to play the critical role enabled by the Competition Act, Mwasa suggests it is also contemptuous of that legislation,” said the union’s secretary general, Tuwani Gumani.
Sekunjalo Indepdendent Media Consortium’s submission to the Competition Commission reveals that the Government Employees’ Pension Fund (GEPF) has taken a R500 million stake in what is said to be a R2 billion deal. Surve has listed businessman and fellow Brics Business Council member, businessman Sandile Zungu. Nelson Mandela’s grandson, Mandla and his Mvezo Development Trust, are also listed as shareholders.
The problem is, says an insider close to the deal, that those stakeholders don’t come near funding the entire R2 billion. Even considering that they might have come up with half the money, including the GEPF stake, who is funding the other R1 billion?
Business Times editor, Rob Rose, wrote on Sunday that the Irish shareholders will vote on the Sekunjalo offer on June 17, “and would probably sell their shares to Kim Jong-un if he knocked on their door”.
“But they should demand more transparency. After all, what kind of bizarre deal requires that the identity of the buyers remain confidential? This secretive group is also paying a rich price. A R2 bn pricetag for a company that made only €11.4m in the half year to June (annualised to €22m ) doesn’t seem too pricey. When you factor in the cash needed to kick-start a cash-strapped company, the scenario changes. After all, it’s easy to make (short-term) profits when you pay peanuts and don’t fix printing presses. But then, if you’re looking for returns of a different kind, perhaps this is less important,” he wrote.
Surve, on Twitter, struck right back. “Sekunjalo will not be bullied by Peter Bruce/Avusa and a cosy cabal trying to prevent media transformation and transparency”. He said “Avusa is to the DA what the TNA is to the ANC and Independent will bring a breath of fresh air”. He said TMG was “anti-competition” and “antitransformation”.
Rose wasn’t’ the only one to question the funding. Professor Jane Duncan, of Rhodes University, told Business Day the main antidote for the “speculation” around the acquisition by Survé was “complete transparency and that waiting until next month could be too late”.
“It is important so that proper debate can be held on the deal. Once it goes through, it’s a done deal. Organisations and lobby groups need the opportunity to approach the Competition Commission regarding the deal. But if they wait until then (next month) it will be water under the bridge,” she said.
Times Media Group CEO Andrew Bonamour said Survé’s tweet was not fair. ‘To stand on a public platform to slate us like that is not fair. Even journalists who don’t work for us have asked questions about the funding for the Independent sale. But he’s welcome to sit with us and see the progress we have made on transformation,” he said.
Far from the executive offices of the big media players, Mwasa said a notification it received from Sekunjalo “rather blithely states the merger ‘will not have any negative affect on competition and there will be no adverse public interest concerns or job losses arising as a result of the merger.
“As a general point Mwasa would like to put on record that, given the very poor level of disclosure contained in the notification, it is impossible to know whether any of this statement is accurate. Competition and public interest issues are of considerable interest to Mwasa in part because of the impact they have on the long-term sustainability of jobs and so it is likely that we will want to challenge this unsubstantiated claim at a later stage,” it wrote.
In its submission, Sekunjalo said the “proposed transaction will not have an adverse effect on employment as no retrenchments are envisaged as a result of same”.
But Mwasa is not satisfied. “It is impossible for Mwasa to know how seriously to take this statement by Sekunjalo. Throughout the notification Sekunjalo continuously refers to the fact that it is “newly formed and has not traded previously”, that it has no assets, no turnover, no market share etc. In addition Sekunjalo states that no firms control Sekunjalo.
“Whatever Sekunjalo’s intentions are at this stage it is impossible to determine how, given it has no assets or trading history, it can be held to such a commitment. It is therefore nothing more than a well intentioned statement without any force. Indeed the lack of any turnover, assets or trading history at Sekunjalo raises concerns about the vulnerability of the current approximate 1 400 jobs at INMSA,” Mwasa said.
Sekunjalo responded via lawyers in the form of a letter to the Commission. It said the union’s interest should be limited “to the effect the transaction will have on employment and given that no retrenchments are envisaged as a consequence of the merger, Mwasa’s concerns, as set out in the letter, are without substance”.
Mwasa said that because” Sekunjalo is an entirely new company and without any history it is critical that Mwasa is provided with information relating to Sekunjalo’s shareholders and any agreements relating to the company’s shareholding structure.
“To this end we would like to see
1) A list of the shareholders and their respective shareholding;
2) Confirmation that these shares are held beneficially and not as nominees;
3) The shareholders’ agreement;
4) Confirmation that no party has the right to appoint the chairperson or CEO;
5) Details about how INMSA is to be funded going forward.
Sekunjalo has refused the union’s request. “Since the information and documents do not concern employment issues, furnishing this information and/or documents to Mwasa is unlikely to allay any employment concerns Mwasa may have, which the merging parties reiterate are unfounded.”
Sekunjalo’s lawyers said the documents were confidential.
PHOTO: Independent Newspapers
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