Activist questions openness in BNP deal

New questions have emerged over whether JD Group was fully transparent in its R4.6-billion deal to sell its financing arm to BNP Paribas.

This week, 100% of shareholders voted to accept the deal, despite a volley of questions from shareholder activist Theo Botha. JD Group, which owns Russells, Joshua Doore, Incredible Connection and HiFi Corporation, has struggled as bad debts from its customers have increased. It planned to sell the financing arm so it can focus on its furniture business.

For a start, Botha questioned why the price that JD Group was going to get for the financing arm had dropped from R6.8-billion to R4.6-billion, supposedly as a result of several write-downs.

Botha said more information was needed about these write-offs.

CEO Peter Griffiths said all the necessary information had been disclosed to shareholders. But Botha said the circular was "flawed" and shareholders had to scrounge around to make sense of a "jigsaw puzzle".

Griffiths said the board could not reveal more information than it did to the market to just one shareholder, as that would not be fair to the others.

However, Botha argued that the JSE needed to change its rules on company circulars to ensure that all relevant information on deals was disclosed to shareholders before a vote.

He also did not understand why Steinhoff was being paid R18-million, about 90% of the transaction fees from the deal. Griffiths said the R18-million was not a success fee but for services rendered as part of the transaction.

Steinhoff, which happens to be JD Group's biggest shareholder, also took care of the legal fees for the transaction. JD Group is expected to publish its interim results tomorrow.