Cell C has hit back at its black economic empowerment partner CellSAf, which at the weekend threatened to take the mobile operator to court if it proceeds with a planned restructuring in terms of which Blue Label Telecoms will acquire 45% of the business for R5,5bn.
CellSAf, which owns 25% of Cell C (prior to the planned restructuring), said on Sunday in a statement that it remains “resolutely opposed” to the recapitalisation plan for Cell C. It threatened to do all it can, including approaching the courts, communications regulator Icasa, the Competition Commission and the government, to stop the transaction from proceeding.
“We believe there have been and remain other options to manage Cell C’s capital structure requirements but those alternatives will not see the light of day while the Cell C board is doing the bidding of just one shareholder, namely [Cell C parent] Oger Telecom,” said CellSAf director Zwelakhe Mankazana in the statement. (Read the full story here.)
But Cell C’s chairman, Mohammed Hariri — who also chairs the board of Cell C parent Oger Telecom — has hit out at CellSAf, saying accusations against the Cell C board are “baseless”.
CellSAf said in its statement that Cell C’s board had not consulted with it, nor provided it with an opportunity to raise concerns related to this transaction.
But Hariri said the Cell C board has “consistently followed lawful and good governance practices” in the restructuring process.
“In that regard, the directors who represent CellSAf in 3C Telecommunications, the sole shareholder of Cell C, received all necessary documentation and information pertaining to the recapitalisation plan and were fully informed throughout the process. Two of the directors representing CellSAf in 3C Telecommunications approved the recapitalisation plan in December 2015,” Hariri said.
“Since December 2015, CellSAf has launched several unsuccessful and ill-conceived legal proceedings in an effort to block the recapitalisation plan and even attempted to wind up Cell C’s holding company,” he continued.
“The intended purpose of CellSAf’s failed legal actions and claims was to obtain an undeserved and unwarranted financial gain.”
Hariri said that CellSAf has been given many opportunities to provide a credible alternative to the recapitalisation plan but has failed to do so.
He described as “completely untrue” a claim by CellSAf, whose shareholding in Cell C will be reduced to 7,5% under the restructuring plan, that it will be expected to assume additional liabilities of almost R3bn.
The intended purpose of CellSAf’s failed legal actions and claims was to obtain an undeserved and unwarranted financial gain
“It is important to note, that CellSAf holds a 25% debt-free and unencumbered stake in 3C Telecommunications and therefore has no liabilities. Contrary to its claims in the media, CellSaf has also never provided any financial investment or operational support to Cell C since its launch.”
He said Oger Group has invested more than US$1,5bn in Cell C to ensure it continues to operate, “despite never receiving any dividends”.
“Moreover, Oger Telecom has also agreed to support the recapitalisation plan solely in furtherance of Cell C’s future and will receive no payout whatsoever from the implementation of the plan.”
He added that the plan will result in Cell C’s shareholder representation from historically disadvantaged individuals rising from 25% now to more than 30%.
“The Cell C board is disappointed by CellSAf’s statements given that the recapitalisation of Cell C will ensure a sustainable business for all concerned, including CellSAf,” Hariri said.
“The recapitalisation plan brings new cash equity as well as the contribution of strategic partners into Cell C, both of which are critical to its continued growth and success.” — (c) 2017 NewsCentral Media
- Now read: Blue Label, Cell C firm up a deal