Maltacom opens way for privatisation

Maltacom shareholders yesterday paved the way for the company's privatisation process during an extraordinary general meeting held at the Hilton Malta Conference Centre.

Three resolutions - on disclosure of information to a prospective investor, on removing the cap on share ownership and on corporate governance - were approved by a majority of over 75 per cent.

Two of the resolutions were proposed by the government as the majority shareholder and one by the board of directors.

But opinions expressed at the meeting showed a good number of shareholders are not in favour of the government's plan to sell its Maltacom shares.

The meeting, which started at 11 a.m., was called by the board after the Investments Ministry informed the company on December 22, 2004 of the government's intention to dispose of its 60 per cent shareholding.

Maltacom chairman Sonny Portelli said the board was advising shareholders to approve the resolutions on grounds that any investor interested in the government's shares, which are worth "tens of millions of liri", would only invest after having done its homework well.

Mr Portelli said it was in the interest of both the government and the potential investor that Maltacom disclosed "sensitive" information which is normally kept under wraps to protect the company's commercial interests.

In the first "ordinary" resolution, shareholders were asked to give their consent to the company to furnish any "price-sensitive" and "confidential" information to the government and any bona fide bidder for the purpose of the transaction.

Mr Portelli said if shareholders gave their consent, the board of directors would take an active role in the process so as to "influence and control" the way in which commercial information is disclosed.

"You have my word that any information that will be disclosed will be given out in the most controlled manner. That same information will be used in a most defined manner," the chairman promised.

Reacting to this resolution, some shareholders said it would not be right if Maltacom shared sensitive information with an investor that might "turn down the offer at the last minute".

One shareholder said the clause should provide for "harsh penalties" preventing interested investors from "taking advantage" of the information that would have been disclosed to them.

A number of shareholders opposed the government's intention to sell its shares to a strategic investor. While some said shares should be made available to existent shareholders, others argued they should be sold to the public.

The board of directors, however, insisted it would not go into that issue as it could not dictate how the government disposed of its shares.

Mr Portelli said the government was the majority shareholder owning 60 per cent of the shares and, like any other shareholder, it was entitled to sell its shares "to whoever it wants".

Mr Portelli insisted that as far as the directors knew, the government had not started negotiations with any potential investor. At least, the board had not done any research on potential investors that had been named by the government.

A second resolution proposed by the government said that clause 5.2 of the memorandum and articles of association should be removed when the government informs the company in writing that it has entered an agreement with a strategic investor to sell its shares.

The clause is a restriction which lays down that no shareholder other than the Maltese government may own more than five per cent of the total issued share capital.

Shareholders said this was a good proposal per se because it promoted the principles of a free market. However, some objected to the fact that shareholders were being asked to approve this resolution simply because it suited the government at this stage of the privatisation process. Proof of this, they said, was the fact that the resolution proposed the removal of the capping after the government announces the sale of shares to an investor and not before.

A third resolution, proposed by the board of directors, dealt with the need to adopt new principles of corporate governance. The board proposed that the worker director should only be appointed by other directors after an election is held among the employees.

"No employee of the company, other than the worker director, shall be eligible for appointment as director," the amendment read.

The board said this proposal in no way implied that employees who sat on the board of directors in previous years have in any way taken advantage of their position.