a BEE-loody mess

[Dave A]

BEE can really complicate business...

The ugly spat between junior miner Simmer & Jack (Simmers) and its empowerment partner Vulisango has revealed fault lines beneath the empowerment structures of South Africa's mining sector.

At the heart of the dispute, which erupted two weeks ago, is Vulisango's claim that Simmers seeks nothing more than a docile BEE partner, unwilling to question management or act in the interests of the company or its shareholders.

Key to this claim is the dilution of Vulisango's empowerment stake from 26% to 22% as a result of shares issued to raise money that would allow the company to pursue growth and investment opportunities.

Simmers has denied this. It says the dispute relates to one shareholder attempting to further its interest over those of the remaining shareholders in Simmers, and Vulisango directors on the Simmers board sought to create empowerment conditions for Simmers that are more onerous than the requirements of the Mining Charter.
full story from M&G here

So much for the posturing - check out the rest of the story and see if you can figure out the real problem here.

[Marq]

"The company has not performed nearly as well as it should have by now. Despite hundreds of millions of rands raised in rights issues and spent on prospecting and capex for both new and existing operations, the company consistently reports higher-than-expected costs, weak or battling operations and a share price that is down from a high of R7,50 in 2007 to a miserable R1.70 today -- exactly where it was nearly four years ago. Yet the gold price then was R3200 an ounce as opposed to today's R7300 an ounce."

So what are they fighting about? It's going down down the tubes anyway.
Seems to have been a hostile BEE takeon from the start.......just one more example of why BEE is the wrong way to go about this transformation scenario. Net result - BEE 0/Company 0/Lawyers 1

[Dave A]

Nothing to do with the infighting for management control and stakeholders (not?) acting in the best interests of the company, I'm sure

Just goes to show the power of sideshows to disable the profit ship.

[tec0]

Well if anything everything comes at a price, sometimes a bit more then what you thought initially. Fact is you get a lot of risk-takers and then you get a lot of people that is bend on taking advantage of the BEE system and milk it till the cow drops dead. BEE cannot be considered as equality to start with. Basically it is government blackmail but again he who makes the law is the law. Thus no arguing this point.

Still it seems where ever there is a lot of money there is...

Vulisango's current and former directors are a cluster of influential businessmen and women with ties to the Eastern Cape ANC, as well as links to government.