JOHANNESBURG (Reuters) - Activist shareholder Allan Gray said on Tuesday it had lost faith in South African construction company Group Five's (GRFJ.J) board to act in the best interest of the firm following the resignation of several directors and its chief executive.
More than 10 executive and non-executive directors at Group Five (GRFJ.J) have resigned since February, including non-executive director Babalwa Ngonyama, chairperson of the firm's audit committee and Mark Thomson, remuneration committee chairperson. No reasons were given for the resignations.
Chief Executive Eric Vemer resigned in February after the company reported its first six-month loss in 11 years due to a 255 million rand ($19 million) settlement with the country's government.
"They have been unable to regain our trust following numerous meetings and engagements," Allan Gray Chief Investment Officer Andrew Lapping told Reuters, adding the board's response after the resignations had been "unsatisfactory".
In May the fund manager, which owns 25 percent of the company, notified Group Five of its request to call an extraordinary general meeting to reconstitute the board following a disagreement with it on the future direction of the company.
Five non-executive directors resigned on Friday ahead of the meeting.
Allan Gray has proposed that Michael Upton, former group chief executive at Group Five, be appointed to the new board along with other four nominated members. The current board opposes Upton's appointment.
Lapping said Allan Gray wanted a team with "continuity and institutional memory, sensitivity to historical industry behaviour and execution of the company's strategy to deliver across the full infrastructure lifecycle and maximum shareholder support".
In a notice to shareholders seen by Reuters on Friday, Group Five said its current board does not support Allan Gray's "requests for an unbundling of Group Five if it does not create value for all stakeholders", as part of the board overhaul.
But Allan Gray said its motivation for a board shake-up was not related to Group Five's strategy, involving the unbundling of assets, or otherwise.
"We simply want a board that is independent with the relevant skills that will protect and grow value for all stakeholders," Lapping said.
Shareholders will select a new board at the EGM scheduled for July 24.
Reporting by Nqobile Dludla; editing by Susan Thomas