Ma-Afrika’s Landmark Court Win Against Santam
The Western Cape High Court took a judgement against the insurance giant, Santam, delivered on Tuesday 17 November, in the matter between Santam and Ma-Afrika Hotels (Pty) Ltd and Stellenbosch Kitchen (Pty) Ltd, relating to policies with Contingent Business Interruption (CBI) infectious disease extensions. This has since been referred to as the “Ma-Afrika judgement”. The Ma-Afrika judgement comes hot on the heels of the Café Chameleon vs Guardrisk matter as well as the Financial Conduct Authority (FCA) judgements in the United Kingdom, which are both under appeal currently.
Santam argued that the indemnity period that applies to the CBI extension is limited to three months. The court, however, found that the indemnity period is eighteen months in this particular matter. Following the Ma-Afrika judgement, Santam has increased its net CBI claims provision by R1.7 billion in addition to the R1.3 billion that was raised in June 2020.
This will have a serious impact on the rest of the insurance industry as the cases that support insured parties have stronger legal precedent. Business interruption is peculiar under Covid-19 but the courts have made it clear that they will support just restitution.
Calgro’s Repurchase Program
Calgro recently entered into a sale of shares agreement with Snowball Wealth, that would see Calgro repurchasing 6 750 000 of the 11 612 667 shares held by Snowball Wealth. Going at a purchase price of R2.10 each, the transaction is valued at about R14 175 000. The transaction is led by PSG Capital and set to be carried out in cash. The repurchased shares will be struck off and delisted, meaning they will not be added to treasury shares.
The growing number of share repurchases is a tell-tale of how much cash SA companies are sitting on. It is also a signal of a lack of growth or investment opportunities presented by the current business landscape.
Sasol’s Last Piece of the LCCP Puzzle
Sasol recently announced that their Low-density Polyethylene (LDPE) unit at the Lake Charles Chemicals Project (LCCP) achieved beneficial operation on 15 November 2020. This unit, which was damaged in a fire during commissioning in January 2020, is the last of seven units to be brought into operation. The LCCP is now 100% complete with a total capital expenditure forecast to be within the previously communicated guidance of $12,8 billion.
The LDPE unit, which uses ExxonMobil technology, has a stated capacity of 420 kilotons per annum, making it one of the largest of its kind in the world. The LDPE unit is one of the three LCCP plants that will form part of the Sasol/LyondellBasell Louisiana Integrated Polyethylene joint venture. Production from the LDPE unit is an important milestone to ensure the joint venture will be enabled to make a meaningful expansion into the U.S. polymers production market. All units which were operating prior to Hurricane Laura have returned to operation, with no further operational impact from Hurricane Zeta.
Author: Nkanyiso Nyawose