Following a dispute, ferrochrome producer Kermas South Africa has cancelled the 28% transfer of shares in its black economic-empowerment (BEE) deal, but plans to reallocate the same stake to meet its original broad-based objectives.

Chairperson, and the man tasked with putting the deal together, Dr Alistair Ruiters, said that this was owing to two individuals holding up the process.

Ruiters said that, under the original BEE deal, the 28% stake in Kermas South Africa was put in the hands of proxy shareholders, with the view to them diluting their holdings in favour of relevant community and women groups.

This, he said, was a legally binding agreement.

Since then, however, two of these shareholders – former North West Parks and Tourism Board chief marketing officer Nawal Motlekar and current Ehlobo Resources director Rafiq Bagus – had refused to dilute their shares, Ruiters said.

The dispute emerged in March after major Kermas South Africa shareholder International Mineral Resources (IMR) offered to buy BEE consortium Batho Berena's 28% at a price said to be $25-million for each 1% held.

The problem was that Batho Barena – comprising Ruiters’ and Bagus’ Ehlobo Resources and two other groups – had not yet received the shares, owing to suspensive conditions attached to the transaction, Ruiters stated in a telephone interview.

“Number one, they are saying ‘I don’t want to dilute’, and two, ‘if I do dilute, I want to be compensated at the value of $25-million for shares I don’t own’, the former Department of Trade and Industry (DTI) DG Ruiters argued.

KERMAS STATEMENT

In an emailed statement, Kermas South Africa said that it intended that the relevant shares be “reallocated for the same consideration contemplated in the sale agreement, in order to achieve the original objectives”.

Ruiters said that none from the initial transaction would be excluded, only that the deal would have to be broad-based, as originally intended.

“Everyone is there, with exception of three people who have agreed that they are leaving the transaction,” he stated. “They have said they want to dilute completely and hand over their shares to the community. Effectively, we have a process that we can probably complete very soon, with the cooperation of everyone, and in consultation with the communities,” Ruiters added.

EXIT

Ruiters said that, as a result of the dispute, Bagus had decided to exit Ehlobo, but at this time was still chairperson and a director.

However, he had indicated his intended exit, and that he would move to Cape Town, he noted.

Bagus did not return a phone call from Mining Weekly Online, but Johannesburg-based newspaper Business Times reported on June 15 that he had “cut ties” with Ehlobo, for “personal reasons”.

Ruiters and Bagus had been close since having worked together at the DTI.

Ruiters confirmed that the Batho Barena , Kermas South Africa and Minerals and Energy Minister Buyelwa Sonjica would meet on Tuesday to try to resolve the dispute.

“I hope that everyone sees sense in the matter,” he stated, adding that he hoped the dispute could be solved in an “amicable manner”.