Kumba shareholders were recently the lucky recipients of three documents - mailed on about October 9 - that many shareholders find as complicated and confusing as the Star Wars saga.
The first document, which is called a Circular to Kumba Resources Limited Shareholders, outlines (among other things) the implementation of an empowerment transaction, a change of name to Exxaro Resources Limited, the sale of an interest in Sishen Iron Ore to Kumba Iron Ore Limited, and the distribution in specie by Kumba of its entire shareholding in Kumba Iron Ore to its shareholders and the separate listing of Kumba Iron Ore on the JSE.
The document concludes with four colourful forms. One of them is a blue form of proxy for the annual general meeting that was held on Thursday and is now clearly obsolete as the meeting is over. Incidentally, the meeting was successfully held, all the resolutions were duly passed and the entire transaction outlined in the three documents is firmly on track.
As a consequence of this, the other three forms now come into play. But herein lies something of a rub that has confused everybody.
All shareholders, whether they have dematerialised their shareholding or are still clinging to share certificates, received the same documentation and forms. However, only shareholders who still hold physical share certificates need to fill in one of the three forms.
All other shareholders will have to contact their central securities depository participant or broker to advise them of what action to take.
As the transfer secretary knows which shareholders are certified and which are dematerialised, it would have been helpful to have provided the forms only to those who need them to avoid confusion.
Back to the forms. The pink one will be completed by certified shareholders who want to accept the pro rata repurchase. The yellow form will be completed by those certified shareholders who wish to accept the mandatory offer. The green form is to be completed by all certified shareholders who wish to surrender their old Kumba share certificates in exchange for the new ones reflecting the name change.
In a stroke of genius the drafters of the document had the foresight to provide a toll-free number for confused shareholders to ring. I am no great fan of toll-free numbers, because they usually result in you being shunted from pillar to post with very little being achieved other than getting yourself into a thoroughly bad mood. With trepidation I tried the number and found the service remarkably good, so I can recommend it to shareholders if they are confused.
However, the long and short of the entire episode is that if you wish to retain your Kumba shareholding untrammelled by all the corporate action, you do not need to do anything. The default option ensures this.
The second circular, a monster 244-pager, is the pre-listing statement of Kumba Iron Ore and is prepared in terms of the listing requirements of the JSE. It provides all the information, and much more, that you could possibly want to know about the company.
The third circular, a gallant tome of 204 pages, outlines the revised listing particulars of Exxaro Resources Limited (the new name for the old Kumba).
So by doing nothing you will get your new shares in Kumba Iron Ore Limited (the shares that are being unbundled) and your shares in Exxaro Resources Limited. The Kumba Iron Ore shares will be listed for trading on the JSE on Monday, November 20, 2006.
It is accepted that shareholders are required to receive all this information in terms of the Companies Act, the JSE listing requirements and the dictates of good corporate governance.
But why is it not possible to include with this very legalistic and complicated information a two-page document explaining to lay shareholders exactly what they need to do and what their options are?
This would allow those who are as keen as mustard to work through the complicated documents at their leisure, and the novices to plough through the two-page precis version before embarking on their chosen course of action.
In an unexpected windfall for shareholders, late yesterday afternoon the directors of Kumba Resources declared a special unbundling dividend of 185 cents per share, which will be paid on November 27 to all shareholders registered at the close of business on November 24.
The news was well received by the market, and Kumba's share price got a decided spring in its step and rose by about R1. Shareholders who have been battling with the complex restructuring will feel that this dividend has mitigated some of the pain by adding a little gain.
- David Sylvester is the chairman of the Shareholders' Association, telephone (021) 686 7567.