The Securities Regulation Panel (SRP) has dismissed an appeal by MGX and the Mandy Rebecca Price Trust and has ordered them to offer affected EC-Hold shareholders R2.40 per share.
However, MGX says the SRP gave no reasons for the decision, "as MGX is advised it should have done", and adds that it will continue to consider alternative courses of action.
The EC-Hold share price moved immediately on the news of the ruling, rising 39c or 38.61% to R1.40 by 2pm. The MGX share was 24c or 3.2% down at R7.26.
MGX originally offered EC-Hold shareholders R1 a share, but a complaint was lodged with the SRP, whose executive committee ruled midway through last year that MGX and the Mandy Rebecca Price Trust had acted in concert for the purposes of entering what the SRP calls an "affected transaction".
MGX rejected that ruling and appealed to the full panel of the SRP. It has said repeatedly that it has not done any wrong.
However, the full panel has ruled unanimously that the appellants were acting in concert and that they have to make an unconditional offer of R2.40 per EC Hold share to all persons (other than themselves) who were shareholders of EC Hold on 11 October 1999.
The costs of the panel, as well as those of the executive committee before the appeal, are to be paid by the appellants, although the panel`s chairman, Cyril Jaffe, says MGX and the Mandy Rebecca Price Trust have 10 business days to require the panel to hear why the order for costs should be varied.
Jaffe has drawn the attention of those who ceased to be shareholders of EC-Hold on or after 11 October 1999 to the provisions of Section 440M(4) of the Companies Act.
It reads: "Any person who contravenes any of the rules shall be liable to any other person for any loss or damage suffered by that person as a result of such contravention."
Says Jaffe: "It will be advisable for interested parties to consult their legal advisors as to their respective rights and obligations."
MGX says it maintains its position that no concert party activity occurred with respect to share dealings in EC-Hold shares. "MGX will continue to consider its alternative courses of action, taking all of its stakeholders into consideration.
"Should the panel decide to proceed with the matter and to institute proceedings in the High Court, MGX and its legal advisors are confident that the High Court will exercise proper judicial discretion, according to appropriate laws of process and evidence, in considering the facts."
It adds that should the panel succeed in requiring MGX to offer to purchase the EC-Hold shares at a higher price, the increase in the total purchase price is likely to be less than R30 million and should not materially affect the business of MGX.
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