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JSE-listed construction company Group Five has lost five board members in a mass resignation. The board members announced their resignations following a breakdown in talks with its biggest shareholder, Allan Gray.

Group Five loses 5 board membersIn May, Allan Gray notified Group Five of a request to call an extraordinary general meeting (EGM) to reconstitute the board following a disagreement on the future direction of the company. According to reports, the dispute originated with Allan Gray’s insistence that Group Five's investments and concessions business be unbundled and sold off to a local private equity firm.

This division is the most profitable in the Group Five stable, and the board reportedly did not want to lose the business unit because of its importance to the company's long-term growth strategy. The private equity firm, which operates tolls in Africa and Europe, expressed interest in buying this unit as well as Group Five’s manufacturing business, which provides building materials and reinforced steel products.

Allan Gray subsequently announced its desire to appoint five new members to the board, saying it had lost faith in the current members.

“Allan Gray does not have an agenda with regards to Group Five's strategy. We want an independent board with the relevant skills that will protect and grow value for all stakeholders,” Andrew Lapping, Allan Gray's Chief Investment Officer said in a statement.

“Considering the breakdown of negotiations on how to reconstitute the board and the tenor of the relationship with the company’s most material shareholder, the board acknowledges that it is in the interest of the company that the non-executive directors step down,” Group Five said in its own statement.

The five non-executive directors resigning are Philisiwe Mthethwa, the current Chair, Kalaa Mpinga, Willem Louw, Justin Chinyanta and Vincent Rague. Allan Gray has proposed five directors it wants appointed as a bloc. These individuals are Reitumetse Huntley, Nazeem Martin, Nonyameko Mandindi, John Job and former Group Five CEO Michael Upton. Upton, who was in charge of the company when it was found to be guilty of collusion, is a controversial choice. The Group Five board has proposed alternative candidates in Cora Fernandez, Thabo Kgogo, Edward Williams and Keneilwe Moloko.

The latest resignations bring to 11 the number of executives and non-executives that Group Five has lost since February this year, including CEO Eric Vemer.

Image credit: http://www.g5.co.za/reports/ar_2011/mes_ceo.php

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