Shareholders reject Telkom’s cash-for-shares resolution

Telkom shareholders have shot down a special resolution at its AGM that would have allowed the company to issue more shares for cash if it had been approved.

A special resolution — namely the general authority for directors to issue shares for cash — won support from 73.84% of shareholders at the AGM, just shy of the 75% required for approval.

All other resolutions tabled were passed by the required majority of Telkom shareholders present at the meeting.

The board requested general authority for directors to issue shares for cash, which Telkom described as a “standard resolution passed annually”. However, the board had requested to increase the threshold from 5% to 10% due to concerns about the impact of Covid-19.

“Although the board does not expect to issue shares, it has taken a view to increase the threshold to provide the board agility and flexibility to enable an effective post-Covid-19 response, should this be necessary”.

“The board would like to reiterate that the amendment of the resolutions is not an expression of Telkom’s intention to issue shares to the market,” it told TechCentral on 3 September, before the AGM, in response to e-mailed questions.

No rights issue

Telkom was responding to market speculation at the time that it planned to do a right issue to fund its participation in the upcoming spectrum auction to be led by communications regulator Icasa.

“Shareholders are advised that Telkom has no intention to do a rights issue. In the unlikely event where the board takes a decision to issue shares, an official announcement through Sens will be issued to inform all shareholders,” it said.

The company added that it “remains comfortable with its balance sheet with a net debt to Ebitda (earnings before interest, tax, depreciation and amortisation) of 0.7x as reported for the period 31 March 2020. There has been no increase in debt since our annual results for the period 31 March 2020.”  — (c) 2020 NewsCentral Media