Turmoil after ANC buy-out

2014-04-29 00:00

THE ANC’s investment takeover of a strategic KZN supplier to Eskom has left the company in turmoil, including retrenchments this month, a restriction on key exports, fears for major job losses, and a standstill in some factory divisions.

And The Witness can also reveal that the Pietermaritzburg-based firm was so well positioned last year that the plan — backed by a major bank — was to double its size, before the ANC stepped in.

On Saturday, Weekend Witness exclusively revealed that the ANC’s investment arm, Chancellor House, has led a secret buy-out of Pfisterer South Africa, which relies for 50% of its business on contracts from Eskom — a state-owned entity.

The deal — reportedly worth R170 million and spread over 18 months — comes with the expiry of the company’s existing R550 million contract to supply cable insulators, ahead of major new tenders.

The ANC’s treasurer-general stated two weeks ago that Chancellor House should not invest in any company which bid for state tenders, and critics have slammed the ANC’s potential benefit from Eskom contracts as “illegal”, and a threat to fair elections.

The company has been under the caretaker stewardship of a parent company director, Kai Steinfeld, during the sale negotiations since its long-time managing director, Rob Schorn, was forced to resign last July. The sale was driven by Orene Mnguni, who heads the company’s empowerment entity, Speedcraft, and who will now become a “major shareholder” in the entire company. Yesterday, the company told The Witness that it had built a financial consortium around Mnguni in close co-ordination with Eskom due to changes in Eskom’s procurement policies, “which put more emphasis on operational BEE criteria”.

Industry insiders were equally stunned that the consortium had done a deal that allows Pfisterer Germany — which is now the South African company’s chief export competitor — to remain a co-owner privy to all of their contracts, at least for the next 18 months. The parent company opened a low-cost factory in China last year

Yesterday, key staff at Pfisterer said five highly skilled artisans were retrenched and three tool makers had resigned in the past month. They said that machines in the company’s high voltage factory were standing still; that the foundry was part closed; and that the company is banned from selling high-value products to its own clients in Africa.

Mbuso Ngubane, the KZN regional secretary for Numsa, said the union would meet with management this week to determine whether more jobs were under threat.

Pfisterer spokesperson Euan Crawford denied a crisis at the company, saying: “The business is in good health, [and] there is no retrenchment programme in place.”

However, millwright Peter Hyde (47) said he was one of five artisans retrenched just two weeks ago. “Its very disappointing, but the factory is basically dead,” he said. “We were told in January our jobs would be safe, but then we heard in February the ANC was going to take over — we were totally shocked.”

A current staff member claimed that Pfisterer Holdings had banned its South African subsidiary from selling high-voltage insulators — including all 400kv, 330kv and 230kv rods — to its primary export market in Africa. Crawford said the factory “focused” on low- and medium-voltage work, but said: “There is no “restraint order” on sales to African countries, in fact the plant is currently working on a large order from a West African country at the moment.”

The staff member said: “There were proposals on the table to grow the company up to three times the size — 1 500 employees. But there is so much insecurity right now that virtually all the skilled guys will be gone in the next six months.”

Marc Hindle, a bidder for Royal Bafokeng Holdings, said Pfisterer had significant growth potential last year as “a strategic company in South Africa”. “But I fear for the jobs there under this new ownership — they appear to be relying totally on the expectation of Eskom contracts, and there are no major contracts in the pipeline.”

Meanwhile, the firm’s former non-executive director Derek Lawrance said he had previously been tasked by the German parent company to identify banks and “suitable black empowerment equity candidates” for a buy-out by the directors at the company.

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