The two senior Business Connexion (BCX) executives, who yesterday cashed in shares to the value of R1.6 million, say the transaction was a case of "use it or lose it".
BCX yesterday afternoon told shareholders that CEO Peter Watt and CFO Alan Farthing had exercised over 230 000 share options and sold these for a total value of R1.6 million.
Watt's 166 732 share options came in at a strike price of R3.08 per share. This was down on the original strike price of R9.58, due to special dividends paid as a result of the group's 2004 restructuring. Watt sold the shares for R1.15 million.
Farthing exercised 66 633 share options, at a strike price of R2.32 per share. This was down on the original strike price of R8.82, similarly due to special dividends paid as a result of the group's 2004 restructuring. Farthing's shares sold for R459 767.
Loss of confidence?
Watt and Farthing deny the share sale is as a result of a loss in confidence that Telkom's proposed acquisition of BCX would go through.
The Competition Tribunal is hearing arguments on the acquisition which, if approved, could see BCX shareholders receive R9.25 per share.
Late last year, BCX extended the completion deadline for the deal to 15 March. This, said the company, would allow it enough time to gauge the likelihood of the deal being successful before the tribunal.
Last week, BCX and Telkom agreed to extend the deadline to 31 May.
Financial decision
Farthing says the tribunal hearing has nothing to do with his decision to exercise his share options.
"These share options were set to expire in August. However, we will enter a three-month closed period at the end of May. I believe it's highly unlikely we will have a decision from the tribunal by the end of May, so I decided to exercise the share now. It was really a simple question of using the share options or losing them," he explains.
Watt - who would also lose his options after 31 May - says he thought Farthing's decision was a fair financial option.
"I will be away for a month and who knows what could happen in that period. I opted to exercise the options now purely on its financial benefits. Besides, this share sale did not represent my full shareholding in BCX. I still have in excess of 600 000 shares in the company," he explains.
As for his confidence in the outcome of the tribunal hearing, Watt says it really is impossible to say which way it will go.
"I'm not nervous about how this hearing will go; I just haven't the vaguest clue as to what its outcome is likely to be. Every day that hearings take place appears to swing sentiment in one way or another," he says.
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