Investors step up bid to oust PPC board

PPC shareholder Foord Asset Management has increased its stake in the cement-maker to achieve the 10% support required to request a meeting to elect a new board, according to a source familiar with the matter.

Last week, Foord bought shares on the open market after an earlier request for a meeting was rejected, the source confirmed.

Foord will ask for a special shareholders' meeting for a second time this week. It has the support of fellow investor Visio Capital Management, the source said.

PPC, South Africa's biggest cement-maker, has become embroiled in a battle between its board and at least two shareholders, over the resignation of CEO Ketso Gordhan last month.

The board is dysfunctional, says Foord, and is hampering expansion in Africa amid increasing competition in the domestic market.

"Should we receive a competent request for a meeting then we will follow due process," the cement company's head of investor relations, Azola Lowan, said.

Carolyn Levin, head of research at Foord, declined to comment.

Gordhan resigned on September 22 after less than two years as CEO, citing differences of opinion with fellow directors over various matters, including his intention to fire an unidentified senior executive.

He later said he would return to his post if he had the backing of shareholders. Foord shares Gordhan's concerns that the board is not capable of carrying out PPC's plans, the source said.

"This dispute, that has gone public for a month now, is weighing negatively on the stock's performance and could potentially damage investors' perception of PPC as an investment destination," Andy Gboka, an analyst at Exotix, said.

Exotix has a hold recommendation on the shares.

During the five days ended October 17, about 30.4million shares were traded, or 3.7 times more than the previous week, according to data compiled by Bloomberg. The stock has fallen about 8.6% since Gordhan's resignation.

If the dispute "lasts for too long other shareholders may have to step in to end this confusion and defend the long-term value of their participation," Gboka said.

The Public Investment Corporation, PPC's biggest investor with an 11% stake, declined to comment.

On September 30, the PIC said it was in "total support" of the board.