SOUTH AFRICA: PPC shareholder says new board needed to pursue Africa strategy

Foord Asset Management will send a second letter to PPC to demand a special shareholder meeting to elect a new board within a month.

PPC, South Africa’s biggest cement maker, needs a new board to keep expansion plans on track following the resignation of Chief Executive Officer Ketso Gordhan, according to shareholder Foord Asset Management.

“It’s critical that the board be replaced with a functional board as soon as possible to restore continuity to the operations strategy and employees at PPC,” Carolyn Levin, a portfolio manager at Cape Town-based Foord, said by phone today. “We aren’t siding with former CEO Gordhan.”

Gordhan resigned on September 22 after less than two years as CEO, citing differences of opinion with fellow directors over matters including his intention to fire an unidentified senior executive. He said on September 29 he would return to his post if he had the backing of shareholders. The Public Investment, PPC’s biggest investor with a 12% stake, said Sept. 30 it was in “total support” of the board and the company’s strategy.

Foord, which Levin said owns more than 5% of PPC, plans to send a second letter to the company this week to demand a special shareholder meeting to elect a new board within a month. A request sent earlier in October was “rebuffed,” Levin said.

“We want a new board and will leave leave it to them to choose a new CEO,” she said. Foord has met with Executive Chairman Bheki Sibiya and Gordhan in recent weeks.

Africa expansion

PPC shares traded 2.7% higher at R28.51 as of 4:18 p.m. in Johannesburg. They declined about 15% after Gordhan’s resignation to the close on October 17.

“It doesn’t send a positive message to the investors in the short to medium term,” Andy Gboka, a London-based analyst at Exotix Partners LLP, said by phone. “Although Bheki Sibiya has now become Executive Chairman, we think Ketso’s resignation leads to a void in strategic decision making and weakens the company’s ability to react quickly.”

Under Gordhan’s leadership, PPC has expanded its presence in Africa to offset slowing growth in its domestic market. The company has boosted its presence in countries such as the Democratic Republic of Congo, Algeria and Ethiopia as it targets 40% of sales outside South Africa by 2017.

“PPC is below average when it comes to communicating on the company’s strategy and business,” Exotix’s Gboka said. “We still lack regional breakdown, precise guidance on expansion to better gauge the company’s intrinsic value.”

The company has “nothing further to add to what has been said,” a spokesman said in an e-mailed response to a request for comment.