Explosive EGM To Decide Choppies Future
Mbongeni Mguni | Monday July 8, 2019 13:52
On Friday, suspended CEO, Ramachandran Ottapathu, lost a High Court case to have the EGM held earlier. Ottapathu, popularly known as Ram, has secured support from just above 51% of investors for an early EGM, whose agenda involves dissolving the current board. The Festus Mogae-led board suspended Ram in May citing allegations of gross misconduct, with a report on the forensic probe due to be released by next week.
The board says Ram brought the High Court case in order to remove the board before the forensic report is released. The suspended CEO says shareholders have been kept in the dark for too long and the group’s affairs need to be discussed and decided on quickly.
Choppies shareholders last met at their annual general meeting in November 2017 and from that time, the group sank into difficulties as new auditors stumbled across major issues in historical financials. The group failed to release its full year results last year, its share price fell by 76% in one day in September and the Botswana Stock Exchange suspended its listing.
With Ram’s defeat on Friday, the board is expected to call an EGM after it distributes the forensic report, which it expects to contain career-ending misconduct charges against Ram. The board says the EGM should then be “on or about August 15”.
Should Ram’s suggested agenda go through, shareholders will be asked to dissolve the board and replace it with a list already proposed. Interestingly, Ram’s proposed agenda includes retaining Mogae as chair, despite the purported fallout between the two.
Early in June, Ram had lobbied 63% of shareholders for an early EGM, showing he was able to muster support for his cause. Ram holds just under 20% of Choppies, while long time ally and Choppies founder, Farouk Ismail has about 15%. The balance of support for Ram came in the form of written endorsements from fund managers such as Allan Gray, African Alliance, Kgori Capital, Stanlib who hold Choppies equity on behalf of other institutional investors such as pension funds.
Allan Gray later withdrew its support after lobbying by the board. The board is hoping that by circulating the damning forensic report to shareholders this month and into August, Ram’s position at the EGM will be weakened. The board’s task at the AGM is to survive the assault from Ram and his supporters, and remain to chart Choppies future, possibly having secured a mandate to completely remove the suspended CEO.
The board has already engaged a business restructuring firm to “review the Choppies business and identify various action plans for implementation within the business to improve it.” Ram, meanwhile also tabled his own restructuring and turnaround plan to the board four days before his suspension, a document that the board described as “cut and pasted” from other sources.
“The proposal did not pass muster,” reads a filing from Choppies’ lawyer, Desai Law Group, citing board discussions. Banks, the hundreds of companies doing business with Choppies and the group’s plus-15,000 employees in Botswana and the rest of Africa, will be eagerly watching to see which party emerges victorious next month.