News broke yesterday that Oakbay has sold its majority stake in its media and news business, ANN7 (Infinity Media) and The New Age (TNA Media) to a company called Lodidox PTY LTD, led by Mzwanele Manyi for an amount of R450-million in respective amounts of R300million and R150 million. Incidentally this news breaks on the 4th anniversary of ANN7.
According to Oakbay the deal will be concluded over the next few weeks. It appears the Oakbay companies were driven into a tight corner with the closure of its last banking option when Baroda threatened closure of its bank accounts come the end of August 2017. It appears the noble and primary reason for the sale was in preservation of the 7500 employees whose status became affected by the closure of the banks. The Oakbay statement is categorical, ‘the sale is part of Oakbay’s commitment to preserve jobs and provide certainty to over 7500 hard working employees throughout the group and to safeguard the inherent value of the business in which they work”.
The options for Oakbay and its 7500 workers with no bank willing to take them as clients despite it being a successful going concern, proved diminishing by the day. The idea of this purchase was first mooted around March 2017, even the names of Manyi and Mngxitama were bandied around back then.
On a day that we should really celebrate another black empowerment deal we are confronted to ask a challenging question immanent in “Did Oakbay and Manyi not score an own goal with this deal?”
I am on record as one that that has argued the presence of ANN7 and the The New Age has significantly altered our media space regardless to how some may deny it and typecast it in convenience of an untested fake news claim. I have personally for the last six years penned many opinion pieces that made it into the The New Age print. In a sense I must be grateful that the The New Age afforded some of us who are swayed to produce an alternate narrative to the herd mentality of most media houses a platform. One still holds it would make for great post-graduate research to have a media science student attempt unpacking the role and impact of the Oakbay Companies namely ANN7 and The New Age on developing an alternate media narrative in post – Apartheid democratic South Africa.
So in a sense this is personal not for narrow economic interest since I was never paid for my writing by the The New Age or whenever I had appeared on the ANN7 platforms, but because the The New Age offered an opportunity to publicise many of my opinion pieces on a variety of aspects making up our national discourse.
The debate on whether SA needs an alternate media led narrative is a done and dusted one. Let us therefore equally accept that the Oakbay Companies played their role in crafting that alternate narrative.
However there are challenges with this deal as it presents itself. The first challenge and acknowledgment is that Oakbay does not sell its majority interest as a natural process and outflow of a strategic business decision for growth, in truth it’s a form of a hostile take over because the circumstances for continuing its business is not ideal therefore jeopardised by a frivolous aspect of a bank account.
We thus as second concern therefore cannot cheaply make the case of empowerment because Oakbay did not arrive at this deal in a natural sense but is compelled to conclude this deal. It is denied the opportunity to really take the deal public to obtain the best candidate buyer only because it does not really want to let go. If Oakbay must sell in a normal setting it may attain a higher price, meaning someone of the opposite narrative may easily buy it out and kill its presence. I am conscious that in the business world nothing is linear but change is the only constant.
Oakbay is forced to settle for one of those that as it was claimed live of it. It is compelled to settle for one in its camp who had vociferously campaigned in its defence. One some would reduce to a stop-gap fill buyer. It’s therefore not a business savvy scientific decision but one made in extreme discomfort and a landmine riddled field which it must necessarily navigate for its own existence. Where you compelled settle for the better of discomforts.
The third challenge for Oakbay and Lodidox is how this deal was structured; we are told Lodidox will be the new majority shareholder although this is not at all clear what it means. True percentage splits have not yet been shared, meaning majority can be as miniscule as 51/49%, the standard of most BEE deals. We cannot confirm it is the case; all we can do is speculate since we have a means to assess from a history of BEE transactions what majority stake may imply. At the low end it may embrace the stipulated split as I herewith advance.
Manyi in response to his latest acquisition states ‘In addition, I am particularly impressed that the shareholders of Oakbay have agreed to a vendor financial agreement at acceptable terms as part of their commitment to transformation and to expedite the transaction.”
This brings us to the fourth aspect and question. Vendor financing confirms that the seller underwrites the deal; this is not an unusual arrangement some who cheaply condemn this from the armchair of convenience prefers not to accept that most if not all BEE deals since the 1990’s were concluded in this fashion. I think here involuntarily of the JCI – Mzi Kumalo deal that went south.
The challenge with this type of a deal, is the fact that it renders the buyer a paper tiger, and he in all likelihood will sign a deal that is highly stacked in favour of the seller. This is exactly how many Afrikaners made more money from the altar of black economic empowerment rendering them as the true benefactors of BEE deals. This is also how the first wave of black entrepreneurs became overnight paper tigers with an ever-growing debt payable over periods extending 10 years.
Another question is how serious Manyi a player in his own right may be in the media space, since he has been tagged as captured and a lackey of the Gupta family. Unfortunately the challenges of sentiment in the media space proves an undeniable reality. If Manyi was distanced from the Oakbay media footprint it may have lend more credence to this deal, however it now in increasing sense appears more clouded by him becoming the face of a reconfigured intricate deal that will still see the same family in charge.
Certainly Oakbay could have made the deal much cleaner because it had the better part of a year before today to structure a more clean deal with potentially different groups of investors. It would appear the Oakbay leadership were not led by strategic business realignment practice but opted for tactical in the moment decision-making.
I then must assume the Oakbay leadership may have been advised against the deal in its current form, but opted to take a gamble to conclude it with what I will call a minimal defence reasonability guard. I am not arguing Lodidox and Manyi are not up to the task, I am arguing Manyi could have raised this money and opted not for the vendor financing agreement.
It can also be argued that perhaps a clean break on the part of Oakbay would have been more palatable precisely because the proximity of the family name to the business is what delegitimises the business. One therefore may remonstrate if the family had severed ties and offered the whole business it may have been a form of political redemption.
Unfortunately the Oakbay Business interest is tainted and though that tainted state is in many sense sentimental, the collective political damage it has done to the political fabric of our society real or make – belief cannot be eradicated with this deal. The best deal may have been a complete break and almost a give away in which they could claim they love South Africa and the ANC so much that they recognise they have undone some of the hard work we have done over the last 23 years of a constitutional democracy.
My last challenge as I conclude the case for an own goal is who are the losers in this deal. Oakbay and Lodixox are both losers in this deal.
If all goes well, ANN7 and TNA will have operating bank accounts come September 1, 2017 since the colluding banks that have found a frivolous means to close its accounts will now be checkmated to engage Lodidox as an authentic SA company with no such 72 transactions of questionability it leaned on for a case of reputational risk.
It will therefore pretty much be business as usual, very little will change for two primary reasons Lodidox must still pay the money before it can truly claim this advanced majority stake. Also because the leadership at these going concerns will remain in tact and the business model combination continue.
Let us be real, this deal is about a banking account, this deal has little to do with transformation. This deal is between friends in whom the relationship matrix will remain the same since Oakbay continues to be the bank for Lodidox and Lodidox provides a means for bank account.
Whatever the deal may be, a year from now we will still have ANN7 and TNA as an alternate voice and narrative, and that is the bigger picture. May we hopefully have the Gupta family leave our social consciousness, since it conveniently became the dominant theme and subject in cheapness of a ruse for the true corrupt ones. Maybe now that they possibly make their way into the sunset we can wave goodbye to the proverbial ant of state capture and focus our true energy on the elephant that has been hiding behind this ant. An elephant that confirms the true state capture as evidenced in colonial and apartheid capital that still controls not just our economy but also many politicians as a buffer zone that today categorically deny the existence of white monopoly capital
My unsolicited advice to Manyi and his leadership team, is free the content of the ANN7 and The New Age from being considered to exist purely to defend the ghost of a Gupta family when some of us are serious to continue developing the alternative narrative and use this platform.
Congratulations to Many and Lodidox (PTY) LTD for your latest venture into becoming a significant role player as owner of a media house.
Clyde N.S. Ramalaine