Date: Mon Jan 24 2000 01:25
Rick (@ A SA report on "deal-a-day" Kebble, worth a repost for those who missed it) ID#413328:
Copyright © 1999 Rick/Kitco Inc. All rights reserved
Date: Sun Jan 23 2000 00:00
dermo ( @ Speaking of Bre-X, a good article on the Souf Afrikan Poof Miesters "Kibbles" ) ID#270266:
Copyright © 1999 dermo/Kitco Inc. All rights reserved
and you can say "bye-bye" to future Toronto Listing.
BEFORE THE FALL: Once the blue-eyed boy of the SA mining sector, Brett Kebble is an entertainer and polished
thinker who finds that 'slow is boring'
BUSINESS ROUNDU...
Unchecked arrogance finally gets its ma...
Back To Home Page
Unchecked arrogance finally gets its man
Chris Barron Looks at the blazing trail left by whiz kid Brett Kebble
He was a player and the game quickly became his consuming passion. He was known in the industry as 'deal-a-day
Kebble'
BRETT Kebble knows how to "occupy a room", say Kebble watchers. His bulk - he is not ex-Springbok prop forward
Guy's brother for nothing - gives him a head start when it comes to establishing an immediate "presence", but there's a lot
more to the Kebble package than that.
He's extremely urbane: impeccably dressed and groomed, a polished talker with an accent to match. He plays the great
entertainer well. He has a good line in jokes to suit every occasion ( even down to a private secretary called
Meininghaus ) , and is clearly a man of culture. He quotes Shakespeare, is a nimble pianist and pays serious money for
serious art.
Then, of course, he's clever. His brain operates on a higher level. He can interpret a balance sheet at a glance, make
lightning fast mental calculations, spot the gap and visualise the shortest way through it.
Coming from a brief stint as a corporate lawyer in Cape Town, he arrived on the mining scene some six years ago like a
blazing comet. He came in on the back of his father Roger Kebble, who'd retired after a lifetime as a mining engineer,
bought a wine farm in the Cape, got bored and returned to Gauteng in 1994 with around R5-million to buy a seemingly
played out 65-yearold mine called Rand Leases that was going to the wall.
His son joined him and gave early notice of his ability to charm, and to impress, with complex calculations when he
persuaded London fund manager Julian Baring of Mercury Asset Management to back a takeover bid for Randgold.
Considering the Kebbles were an unknown quantity with nothing but the paltry Rand Leases to their name, and Brett
Kebble knew nothing about mining, this took considerable chutzpah.
Thanks to Baring, the Kebbles managed to buy just enough Randgold shares to give them a foot in the boardroom door.
It was all Brett Kebble needed to "occupy the room", so to speak. He schmoozed the shareholders and got them to vote
management out. Barely out of law school and hardly 30, he'd chalked up a hostile takeover in an industry he knew very
little about. He was a player and the game quickly became his consuming passion. He was known in the industry as
"deal-a-day Kebble" as he collected one marginal mine after another.
Analysts and journalists were swept along as much by his polished persona as by a gung-ho, devil-may-care attitude that
made the local mining world as exciting as during the heady days of Barney Barnato.
If they hadn't been so busy laughing at his jokes, admiring his fancy fingerwork on the ivories and his ability to quote
Shakespeare, they might have been more sceptical and noticed vaguely disturbing signs.
From the start he was a heavy share trader, trading up to a million Rand Leases shares a day.
It was a tendency that should have sounded a warning. The way he took over Randgold and others was impressive, but
it was essentially pushing numbers round a board, not building solid shareholder value. There was no cash in sight. He
was simply using one company to take over another by transferring shares. Admittedly value was being added for
shareholders along the way, but how much in relation to the value being added to Kebble family interests was a question
that the sheer complexity of the structure Kebble was creating made almost impossible to answer. The formation of the
family investment vehicle Consolidated African Mines ( CAM ) was one of the most complicated deals SA has ever
seen.
No doubt Brett Kebble was very clever and, with his Porsche, growing art collection and burgeoning property portfolio,
manifestly getting richer by the minute. But where was the meat? With the gold price at 420 an ounce it seemed churlish
to ask. He was the blue-eyed boy and could do no wrong.
At around this time people started hearing a lot about a Canadian gold company called Bre-X with property in Indonesia
and results so spectacular that stock soared to billions of dollars. In the event it turned out the mine was being salted and
Bre-X was worthless, but meantime investors fell over themselves to invest in gold properties in other developing
countries. The more remote the property the more likely they'd buy the story put out by the company that owned it.
Kebble and the chief executive of his exploration arm, Mark Bristow, seized the moment to package properties acquired
in West Africa for the Randgold stable against the advice of at least one seasoned analyst who argued that they were, to
put it politely, not worth the trouble.
The hype around the West African mines - one of which still had to be dug - beggared belief. Aided by the Bre-X
euphoria, the fact that SA investors barred from foreign stocks saw Kebble's West African mines as the next best thing
to Bre-X, and that virtually every local analyst thought Kebble could do no wrong pushed Randgold shares from R4 to
R41.50 in 1997.
Share options worth millions were granted to the Randgold directors before the Bre-X bubble burst and Randgold
shares plummeted to R2.
Companies are entitled to hype new projects, and the biggest and best in mining have all done so and all delivered well
below what they promised.
However, the fact is that three years after Kebble's promises, his West African mines have shown not a cent of profit.
Only one analyst warned that the shares were hopelessly overvalued, and the Kebble team wasted no time suing him.
One week before the case was due in court, it was withdrawn.
When Harmony put in its bid for Randfontein Kebble felt they were overvaluing the stock. Telling advisers he knew what
it was like to have overvalued stock, he referred to 1997 when most analysts in the country were extremely bullish about
the Randgold story except one.
The 1997 share collapse signalled the moment when the market began suspecting that the wunderkind of gold mining
might not be so wunderbar after all, and Kebble has been working hard to regain market confidence ever since.
The trouble was that three years of uncritical adulation had fed Kebble's always incipient arrogance to the point where it
had become uncontrollable. In terms of the mining business he was still an upstart, but he intimidated those with far more
experience who disagreed with him. He phoned fund managers and demand to know why they were selling Randgold or
related shares.
Instead of telling his son to cool it, Roger Kebble - who though a mining engineer in name had only ever run a
consultancy - seemed to have become infected by the arrogance. When he was warned that the Kebble name featured
at the top of too many related companies for the comfort of a market looking for more independence, his reaction was:
"So what?"
The Kebble attitude was, says one analyst, "we want to do this, so it will be done because we have the controlling
shares". Directors, shareholders and the market seemed incidental to their goals.
In the wake of the 1997 share disaster came the JCI saga. Brett Kebble and Mzi Khumalo, who he had met along with
other exRobben Islanders through his former legal secretary, Judy Sexwale, teamed up to buy JCI from Anglo American
in what was meant to be a model black empowerment deal, but quickly unravelled.
Rather than accuse Kebble of gross unprofessionalism, analysts still somewhat starry-eyed over his virtuoso personality
tut-tutted that this was merely a case of over-enthusiasm, of wanting to move too quickly because to Kebble "slow is
boring". At worst it was the inexperience of a youngster ( still only 33 ) who had been too successful too quickly,
someone who didn't know mining, who'd never run a mining company but was suddenly vice-chairman and managing
director of a large mining company. Naturally, they said afterwards, he didn't know the rules.
In addition to a string of other questionable although technically not illegal deals, there then came Kebble's cavalier use of
money owing to shareholders of Randfontein, a company in which he had a minority stake, to add cashflow to a Kebble
family mine, Western Areas. Still excuses were found for his behaviour, still directors and advisers gave him the benefit
of the doubt.
Until literally hours before Kebble finally overreached himself once too often last Friday, analysts were talking him up
because of his latest deal involving a radical simplification of the Kebble structure at home and a proposed listing in
Toronto. He was "a very different man", they said, he had "learned his lesson", "grown up", "matured into a businessman
of responsibility".
"He now genuinely wants to do what the market wants him to do in terms of fairness," said one. He had surrounded
himself with more advisers than ever and was "listening to them". He'd suffered enough, one was told, "give him a break".
In fairness, Kebble looked like he'd cleaned up his act. His new company would have a new board with a foreign
chairman and international directors who knew what corporate governance was and would lock Brett Kebble in, control
him.
Maybe, but now we'll never know. Allowed to go unchecked for too long, arrogance born of adulation finally got its
man. |
