Europe / Middle East / Africa
NSSF faces off with Lafarge over board seat at Bamburi
Apr, 24 2012
(Africa) -- National Social Security Fund (NSSF) is set to open a fresh fight with French conglomerate Lafarge over the control of Bamburi Cement as it demands a seat on the cement makers’ board it lost last year.
The cement firm—which is owned 58.4 per cent by Lafarge—dropped NSSF representative Alex Kazongo from its board in March, citing his failure to attend successive meetings.
Now, the fund has written to Bamburi Cement seeking a position in the board, but it says the company has told it to present its nominee before shareholders at an annual general meeting (AGM) slated for June.
“NSSF sent its replacement but was never admitted on the board,” said Adan Mohamed, the chairman of NSSF.
“We will seek to get back our seat on the Bamburi board in the next AGM since we were told it was not automatic after Mr Kazongo was pushed out,” he said.
The fund has a 14.71 per cent stake in Bamburi and it will have to receive the blessing of Lafarge before being appointed to the board of Kenya’s largest cement maker.
It’s not clear why Bamburi told the fund to present its nominee for vote at its AGM given that companies replace directors as they deem fit. But analyst reckon that Lafarge could not be eager to have the NSSF on its board.
“The demand looks unusual since companies appoint directors mid-stream. I see a struggle between NSSF and Lafarge,” said Robert Bunyi, an analyst with Mavuno Capital.
On Monday, Bamburi’s communication office said it has not seen a formal communication from NSSF.
Last year, the fund told the Business Daily that an investor can only be guaranteed a seat on Bamburi’s board if there stake is above 15 per cent—underscoring the importance of Lafarge’s blessing in NSSF’s quest for a directorship position in the cement company.
NSSF also has a seat on the troubled East Africa Portland Cement Company (EAPCC)—which has been gripped by boardroom wrangles since December—and it has a 27 per cent stake in Portland Cement while the government owns 25.3 per cent with Lafarge 41 per cent.
The quest to get a seat on Bamburi’s board comes at a moment when NSSF is seeking a larger say in companies where it has substantial shareholding such as National Bank of Kenya and EAPCC.
Bamburi reversed its profit drop to post a 11.5 per cent increase to Sh5.8 billion in 2011 helped by export sales, weak shilling and product price increment.
This saw it offer a dividend of Sh10 a share—earning NSSF Sh530.3 million from its 14.71 per cent stake.
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