One of ConvergeNet's largest shareholders wants its current executives removed from the board, claiming they are not acting in the best interests of the company.
Trinity Asset Management, which owns about 20% of ConvergeNet's shares, says the company does not have a good track record of running acquisitions successfully.
Trinity MD Quinton George, who was one of the original founders of the listed ICT stock, says about three or four of ConvergeNet's acquisitions are losing money under the current executive team. He says this trend is now starting to happen at Sizwe, ConvergeNet's largest entity.
However, ConvergeNet is expected to publish higher results for the year to August on Monday.
In October, it said headline earnings per share from continuing and discontinued operations should be between 25% and 35% higher. A year ago, the company reported headline earnings of 1.98c, down from 2009's 4.83c a share.
Headline earnings per share from continuing operations for the year are expected to be between 125% and 130% higher. For 2010, headline earnings from continuing operations were 1.11c, down from 3.42c a share.
Last year, ConvergeNet reported revenue from continuing operations of R784.3 million, a decline on the previous year's R983.5 million. Net profit was R36 million, almost half the reported R62.6 million in 2009.
Taking back power
Trinity has the support of other major shareholders in ConvergeNet, says George. He adds the company is a “great business”, but relies on its leadership.
George says the move is an example of shareholder activism. “You can't have someone with 2% swinging a stick around.”
Trinity approached the Western Cape High Court, through its lawyers, last week, in a bid to have the top-level team ousted under the new Companies Act. However, that move failed as the application should have been lodged in Pretoria, says George.
He does not expect the matter to go all the way to a court again, but he is prepared to take it as far as he needs to. “We're just not prepared to see our value destroyed like it has been.”
Bouwer declined to comment, indicating the company had decided it would make an announcement on Monday when it presented its results.
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