Omnia’s CEO: Why we are not comparable to Steinhoff or Tongaat

Benguela Global Fund Managers says that Omnia’s rising debt levels and ballooning working capital requirements were among the reasons it advised clients to dump the stock. Having sold out of Omnia at R68 a share, the fund manager is now alleging that management is destroying shareholder value and it is not adhering to ESG standards. CNBC Africa’s Karabo Letlhatlha sat down with Karl Givers, Head of Research, Benguela Global Fund Managers. WATCH: As Omnia’s shareholders approve restructuring plan, here’s why Benguela was advising clients to dump the stock

CNBC Africa offered Omnia a right of reply. This is what its CEO Adriaan de Lange had to say:

Thank you for offering Omnia the right of reply to the Benguela allegations. We prefer to engage directly with our shareholders and have been doing so on a regular basis, including with Benguela which is not currently a shareholder. The JSE has also been included in this engagement process.  We have provided extensive and comprehensive answers to the first lengthy letter received and are in the process of answering the 58 page letter received two days ago.  We are also arranging a meeting with Benguela and are prepared to engage with any shareholder who has questions.

We would like to give you some high level responses to the allegations and would also like to emphasise that Omnia is not comparable to Tongaat or Steinhoff. Omnia has published its results timeously with an unqualified audit report. In fact, at this point, Omnia is in a solid position, with a robust business, a short term liquidity bridge loan and the 98% approval by shareholders yesterday of the R2 billion rights issue.  

Board Independence

The Board has assessed the independence of the non-executive directors and is satisfied that all demonstrate the required levels of independence to execute their duties.  Depending on their tenure, members retire annually and stand for re-election at the AGM at which all shareholders have a vote. Rod Humphris, the non-independent chairman for the past 2 years has recently retired from the board and has been replaced by the lead independent director, Ralph Havenstein.

Remuneration

With approval of shareholders, Omnia has long term and short term incentive plans for management to guard against short term pursuit of revenue at long term cost.  The current schemes are under review and shareholders will be engaged before they are finalised.

Audit Firm

Omnia is aware of and supports audit firm rotation which will be mandatory from 2023.

Allocation of capital

Omnia concluded the acquisitions of Umungo and Oro Agri after in-depth research, thorough and intensive due diligence, including comprehensively investigated historic earnings levels, board engagement, independent finance, legal and tax advice, and valuation. The expected level of earnings did not immediately materialise and was exacerbated by the economic headwinds which ultimately culminated in the decision to de-gear and restructure the debt facilities.

Misleading communication

Our SENS on 23 April was factually correct at that time: Omnia was involved in restructuring its debt, but the nature and extent was not yet clear, no repayment of any debt was required and there was no requirement for recapitalisation. The announcement did not provide assurance that there would not at a future time be a need for recapitalisation. The SENS announcement clearly stated that once the process was complete, the outcome would be communicated. The 30 May announcement, at the conclusion of the process, contained the decision to announce a rights issue. 

We acknowledge that we experienced a series of negative factors:  severe weather patterns, challenging financial year, difficult operating environment.  We had used retained earnings to grow and found ourselves exposed.  This led to fast accumulation of debt.

As noted in our recent results, we have implemented a targeted plan. We have new systems and revised processes, improved risk management and governance.  We will continue to review our business structure, streamline operations, extract more value and reduce costs. We believe in the intrinsic value of the Omnia business.

ADRIAAN DE LANGE

CEO: OMNIA

Related Content

Where to find value on the JSE in Q4

The Johannesburg Stock Exchange has had its worst third quarter performance in 9 years with a 5 per cent decrease since the end of June.

Steinhoff has been fined R53 million for misleading markets

Steinhoff disclosed the hole in its accounts in December 2017 which shocked investors and wiped more than 200 billion rand off its stock market value.

Why Steinhoff is barred from selling its shares in Tekkie Town

Bernard Mostert, former Tekkie Town CEO and current CEO of Mr.Tekkie joins CNBC Africa to disclose the reasons behind the judgement which stopped Steinhoff from selling its shares in Tekkie Town. The Judge finally ruled that Tekkie Town did and does not exist for debt servicing.

This fund manager never invested in Steinhoff, here’s why they won’t touch it

Is the grass finally greener for Steinhoff investors? Joining CNBC Africa for more is Zwelakhe Mnguni, Chief Investment Officer, Benguela Global Fund Managers.

Subscribe to our newsletter

Sign up for free newsletters and get more CNBC AFRICA delivered to your inbox

More from CNBC Africa

Does the Competition Competition have capacity to clamp down on COVID-19 profiteering?

As South Africa sees a surge in COVID-19 infections, consumers are increasingly faced with overpriced products on the shelves. The Competition Commission continues to receive complaints, from customers who are already feeling the pinch. The question is, does the Competition Competition have the capacity to clamp down on price gouging? Joining CNBC Africa for this discussion is Makgale Mohlala, Head of Cartels at the Competition Commission and Shawn van der Meulen, Partner at Webber Wentzel.

Uganda’s central bank may cap commercial bank interest rates

KAMPALA (Reuters) - Uganda’s central Bank (BoU) has threatened to cap the interest that commercial banks can charge borrowers, after the industry...

Jambojet set to resume domestic flights on July 15

Jambojet gears up for local flight resumption; lower oil imports and higher tea exports spell current account improvement and the Central Bank invites bids for millions in treasury bonds. Journalist, Joseph Bonyo joins CNBC Afric for more.

Chamber launches business clinics to support women-led businesses

Rwanda’s women entrepreneurs arm under the private sector federation body has launched a series of business clinics with the aim of supporting women-led businesses affected by the Covid-19 pandemic. CNBC Africa spoke to Agnes Samputu, Executive Director of the Rwanda Chamber of Women Entrepreneurs for more.

Partner Content

Maktech’s Godwin Makyao: Now Is A Time of Entrepreneurial Opportunity in East Africa

As an executive decision-maker in both the telecommunications and tourism industries, Godwin Makyao could not have experienced a more diverse set of...

Sanlam launches urgent job-preservation initiative in response to COVID-19

Sanlam Investments is responding to the COVID-19 pandemic through large-scale support of the recovery of South African companies, from small enterprises to...

Trending Now

Africa urged to test more as coronavirus cases exceed 500,000

The African Union Commission said on Thursday it had launched a consortium for vaccine clinical trials to be headed by the Africa CDC, which aimed to secure more than 10 late stage vaccine clinical trials as early as possible.

Malawi’s new female cabinet ministers vow to push for jobs for women

Women now hold 39% of the ministerial and deputy minister roles in the cabinet appointed by Chakwera, 65, who unseated Peter Mutharika in a re-run presidential election last month, which compared to about 20% in the previous government.

Dow, S&P 500 end lower on fears over surging virus cases but Nasdaq hits record high

he Nasdaq hit another record high, however, helped by gains in Amazon.com (AMZN.O), Microsoft Corp (MSFT.O) and Apple Inc (AAPL.O).

Eskom goes after contractors over R4bn Kusile over-payment

One of the power stations that were meant to be the saviour of South Africa’s power supply is causing controversy, even before it’s in full working order. In an explosive letter, Public Enterprises Minister Pravin Gordhan named contractors that he says Eskom over-paid by R4 billion, in the construction of Kusile power station. Sikonathi Mantshantsha, National Spokesperson of Eskom joins CNBC Africa for more
- Advertisement -