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OPINION/ANALYSIS – JOHNNIC

JOHNNIC: It was a bright summer day, a Tuesday morning early in December 2005, and the media entourage that had been following the war for control of this gaming and hotel group had pitched up at the competition tribunal for the latest battle.
In one corner were Hosken Consolidated Investments (HCI) and its high-powered legal team; in the other, key members of the Johnnic board and their legal team.

In the middle were the tribunal members who would have to decide whether to grant approval for HCI’s bid to acquire control of Johnnic.

It was a tense morning. At stake was the 6.5 percent of Johnnic that HCI had acquired in terms of its mandatory offer. If the tribunal approved the deal, then HCI would be able to vote 46.5 percent of the shares at the Johnnic shareholders’ meeting the following Monday.

That would have put it in a very strong position to be able to appoint its four representatives to the Johnnic board, in turn giving HCI effective control of that board.

At the tribunal hearings things seemed to be going HCI’s way, but there were dark mutterings from members of the Johnnic board and mention was made of the competition concerns raised by Johnnic’s ownership of Gallagher Estates.

Fearful that this might prove to be a major stumbling block and wanting to be absolutely sure of victory – now that it seemed so close – HCI offered a proposal to the tribunal in terms of which it would dispose of Gallagher Estates.

Within days the tribunal granted approval to HCI on condition that it sold the hotel and conference venue. The terms of the disposal condition set down by the tribunal were similar to those proposed by HCI.

But how quickly we forget promises made in the heat of the moment. Less than two years later, Johnnic, now firmly in HCI hands, wants that condition to be set aside.

Source: Business Report – With contributions by Justin Brown, Mzwandile Jacks and Ann Crotty