Shareholders+attack+Liberty+Macozoma+buy-back,+Rob+Rose,+B+Day

Business Day, Johannesburg, 30 January 2007
=Liberty’s Stanlib buyout raises shareholder ire=


 * Rob Rose**

LIBERTY Life won the support of 97% of its shareholders yesterday to spend R1,5bn to buy the rest of Stanlib from a Saki Macozoma-led consortium and Standard Bank — but only after a fiery meeting in which Liberty’s tactics were attacked by the asset manager’s former boss, Roy McAlpine, and shareholder activist Theo Botha.

Yesterday’s vote incited a heated exchange between shareholders and Liberty over the extent to which the life assurer is controlled by Standard Bank.

The bank controls Liberty through an outdated pyramid which sees it control 58% of Liberty Holdings, which in turn owns 52% of Liberty Life.

Botha and McAlpine yesterday questioned Liberty on whether minority shareholders were getting the short end of the stick, as they were given scant detail about the deal, while five Liberty directors who recommended the deal also sit on Standard Bank’s board.

McAlpine, who was employed at Stanlib’s predecessor, Liberty Asset Management, from 1969 until 1998, said the Stanlib deal represented a “reversal in strategy from the catastrophic decision some three years ago to reduce its interests in its asset management business from 100% to 37,6%”.

In 2002, Liberty Asset Management merged with Standard Bank’s asset manager to create Stanlib, in which they both owned 50%. In 2003, Standard and Liberty sold 25,1% of Stanlib to the Macozoma-led consortium for R350m, which valued the asset manager at R1,4bn.

Liberty will now pay R629m to the Macozoma consortium, now known as Quantum Leap, to regain that 25% — giving a hefty profit of R279m to the empowerment group in four years.

While the 2003 deal valued Stanlib at R1,4bn, the new deal puts its value at R2,5bn. McAlpine said that by buying back 62,6% of Stanlib on these terms, Liberty had lost out on more than R700m in value. Significantly, McAlpine said, shareholders were not given enough information to decide whether this was a good deal or not, as the circular contained “material non-disclosures”.

Botha had earlier asked Liberty to explain why the circular did not include any of Stanlib’s financial statements to “allow me (as a minority shareholder) to decide if (Stanlib) is a fair and reasonable transaction”.

A Liberty spokesman said only that “this circular complied with JSE rules”. McAlpine countered that the circular was also deficient in that it avoided reference to the fact that Standard Bank, Liberty and Stanlib shared a number of directors, who were clearly related parties.

“When Liberty Life took over Capital Alliance in 2005, it sent out a circular containing 47 pages of information on Capital Alliance.

“In this case, virtually nothing is disclosed and the sole information provided to shareholders is contained in six or seven lines,” he said.

Botha also tackled Derek Cooper on why he chaired the meeting, when he was a related party as he chairs both the seller, Standard Bank, and the buyer, Liberty.

Cooper said he considered himself an independent director of Liberty, saying “we comply with the King code (on corporate governance), the independence of individual (directors of Liberty) is clear”.

The King code says it is important to have independent directors on a board in order to protect minority shareholders.

Besides Cooper, four other directors who sit on Liberty Life’s board also sit on the board of Standard Bank, and three of them are classed as “independent”.

Botha said “the fact of the matter is that the majority of the directors of the Liberty Group are related parties, yet the circular states that the only related party in this transaction is Standard Bank”. Liberty responded by saying that the directors themselves were not related parties, “only Standard Bank is a related party”.

After the meeting, Botha described this explanation as ridiculous, saying “Standard Bank can only be represented by its directors, who clearly are related parties and should have recused themselves from discussions”.

Liberty also defended the circular for not listing Macozoma as a related party.

Standard Bank has repeatedly refused to unwind the pyramid structure that allows it to control Liberty Life, insisting it is in Liberty’s best interests that the bank is in control.


 * From: http://www.businessday.co.za/articles/frontpage.aspx?ID=BD4A371139**

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