Insolvent FSC's private shares to be compulsorily acquired by Government
October 21, 2021
The National Federation Party believes it is now proven beyond doubt, that the Fiji Sugar Corporation is insolvent and needs a massive financial investment to maintain its status as a viable entity in the future.
NFP Leader Professor Biman Prasad said the proof of FSC’s insolvency lies in Government’s moves to compulsorily acquire shares held by minority shareholders and individuals at half a cent (0.005 cents) per share.
He said this means that the shares hold no value, are worthless and the offer is even below the minimum legal currency tender of five (5) cents.
Professor Prasad said he was sent copies of correspondence by individual shareholders who were shocked and angry to receive this communication from the Ministry of Economy, which advised them of Government’s decision to compulsorily acquire minority shares at half a cent per share by invoking Section 263 of Companies Act 2015.
Section 263 empowers anyone holding at least 90% of shares in a company to bid for the remainder of the shares.
However, Professor Prasad believes that the Reserve Bank as a regulator of the Part 22 of the Companies Act must step in to thoroughly ensure that it promotes and encourages the establishment of shareholder associations to safeguard shareholder interests.
He also believes that the conditions of section 263 were not fully complied with, when timelines set out under the law do not appear to be fully satisfied.
"The letters to private shareholders that I have cited look like they were backdated to 26 March 2021. The date of actual postmarked delivery to shareholders ranged anywhere from 6 - 13 October 2021."
The NFP Leader said what is alarming is the fact that Government has offered only half a cent for each share when minority shareholders including cane growers and individuals and other organisations, would have paid $2 or more per share during FSC’s financially viable days.
“If a grower or any other individual paid $2 per share, he or she will not get any return at all with this arbitrary move by Government. For example, if someone had paid $2,000.00 to purchase 1,000 shares, he or she would receive only $5 from government”.
“This is extortionary and hostile behaviour by a majority shareholder, which is also the Government, who should know better and show more empathetic responsible behaviour as a majority shareholder, backed by public money. It is a weeping episode of naked theft and coercion”.
To add insult to injury, the Ministry of Economy, in its covering letter detailing its right for compulsory acquisition, has also sent to minority shareholders, a pre-filled transfer document under Section 440 of the Companies Act 2015, requiring only the signature of a shareholder, and aided by the services of a private law firm."
"The Government does not have the basic decency to be apologetic for its oversight over continued financial mismanagement at FSC, including what seems to be a phantom investigation into a former Executive Chairman/CEO that aided wastage of millions of dollars.
Then the Government has the brazen audacity to make shareholders and taxpayers pay for its incompetence, with stupid and forceful share price offers of half a cent”.
“Cane growers, pensioners, widows and all private shareholders who have faithfully endured years of no returns, and who received this pathetic offer to unfairly fleece them of their just dues, should come together and make a case to the Reserve Bank to uphold their shareholder interests, as section 13 of the Companies Act clearly lays out.
“It is the two-men rule of Voreqe Bainimarama and Aiyaz Sayed-Khaiyum, and the Fiji First government, that are responsible for the collapse of FSC to insolvency”.
“They have fast-tracked the Corporation’s death by decimating through sheer arrogance and dictatorship, a sugar industry that served as the lifeblood of Fiji’s economy for over a century”.
“FSC’s insolvency and the massive decline of the industry staggering towards death is yet another painful example of the so-called Bainimarama Boom and the Fiji First vision of nation-building”.
“The question that arises is this: Why is government compulsorily acquiring almost 6% of FSC’s shares that it does not own and confirming its insolvency by offering a price next to nothing to minority shareholders?”
“What is the motive? Is it to sell FSC to a private investor at a giveaway price and rid itself of any responsibility to growers and shredding the history behind an industry that built the nation?”
“Or is it to further downscale or downsize the industry by just having just one mill each in Viti Levu and Vanua Levu?”
“Private and minority shareholders should pursue all avenues to ensure their shareholder rights are upheld”.
Professor Biman Prasad
Encl - Letter to Minority FSC Shareholders: