here<\/a>.<\/p>\nKriel defended SIG\u2019s acceptance of Sagamatha shares in exchange for the money it is owed and the 8% of SIM it owns.<\/p>\n
According to him the union accepted the value attached to the shares by SIM itself: \u201cSACTWU did not conduct an independent evaluation or independent due diligence. It relied on the representations of value made to it, as subsequently confirmed by independent expert opinion of the value of the share price,\u201d he told amaBhungane in written replies.<\/p>\n
The \u201cexpert opinion\u201d Kriel is referring to is one complied by a California company called Redwood Valuation Partners and included in Sagarmatha\u2019s pre-listing documentation.<\/p>\n
As amaBhungane has previously reported this opinion was based on questionable \u201cfinancial and non-financial information and assumptions made by management\u201d.<\/p>\n
Sign on the dotted line<\/h4>\n
Crucially, both Sactwu (via SIG) and the PIC allegedly entered into two agreements with SIM in the run-up to the listing.<\/p>\n
One was the \u201cShare and Claims Sale Agreement\u201d and the other was a Subordination Agreement.<\/p>\n
The Share and Claims deal was the one that would transform SIG\u2019s R300-million loan into Sagarmatha shares. In the case of the PIC more than R1,5-billion consisting of debts and shares would disappear, to be replaced with Sagarmatha shares.<\/p>\n
Kriel, who also heads the union\u2019s investment company, now claims he and his co-directors never actually signed the agreement \u2013 seemingly an opportunistic argument.<\/p>\n
Copies attached to the court papers show that Kriel and his Sactwu colleagues did initial every single page, including the bottom corner of the final signature page. They also all signed a board resolution approving the agreement on 22 November 2017.<\/p>\n
But no one actually signed the proverbial dotted line on the last page of the document as the designated representative of Sactwu. It might have been an oversight, but the union has tried to exploit it as best it can in its court papers, stating: \u201cNo director of the Plaintiff executed the sale agreement and accordingly the sale agreement was not concluded and it did not take effect.\u201d<\/p>\n
Even though the agreement was expressly tied to the listing of Sagarmatha, it never expressly said that the listing had to succeed. Instead the \u201ceffective date\u201d is the day the JSE approves it and a notice is published on the stock exchange\u2019s news service SENS. That happened on 28 March 2018.<\/p>\n
The Sagarmatha listing was aborted after the JSE withdrew its approval, based on technical shortcomings in meeting the listing requirements.<\/p>\n
Sactwu is now trying to argue its way around this apparently shoddy drafting:<\/p>\n
\u201cOn a proper construction or alternatively by virtue of a tacit term to the sale agreement, if the listing\u2026did not occur on or about 6 April 2018, the Effective Date of the sale agreement would be deemed not to have occurred and the sale agreement would be regarded as being of no force or effect,\u201d SIG\u2019s claim states.<\/p>\n
A R300-million phone call<\/h4>\n
Even if the Sactwu (and PIC) debt still exists, SIM argued that it cannot be made to repay it thanks to a remarkable subordination agreement Sactwu signed (as did the PIC allegedly).<\/p>\n
Apart from Sactwu and the PIC, SIM has a major creditor in the form of a Chinese consortium called Interacom. It is owed just shy of R1-billion which, due to the subordination agreements, ranks above the other funders\u2019 debts.<\/p>\n
If the PIC really is bound by an agreement like this, it could be another explanation for its half-hearted liquidation application: It would not receive any dividend from a liquidation.<\/p>\n
The circumstances under which Kriel signed the SIG subordination agreement on 1 December 2017 are particularly embarrassing \u2013 painting him as a na\u00efve and incompetent manager of union members\u2019 money.<\/p>\n
According to Sactwu\u2019s court papers it only took a phone call from Takudzwa Hove, the chief operations officer of Independent, to convince Kriel that the agreement was both necessary and harmless.<\/p>\n
\u201cMr Hove, representing the First Defendant, orally made the following representations to Mr Kriel, representing the Plaintiff\u2026The subordination agreement would only be utilised by<\/p>\n
[SIM] in the context, and for the purpose, of the listing of Sagarmatha, if and when the auditors of Sagarmatha and\/or the Johannesburg Securities Exchange (“JSE”) required the Plaintiff’s claim to be subordinated for purposes of the listing of Sagarmatha.\u201d<\/p>\n
Hove, according to Sactwu, emphasized: \u201cThe subordination agreement would in any event lapse and be of no further force or effect, one week after the date on which Sagarmatha was scheduled to be listed on the JSE exchange.\u201d<\/p>\n
This of course didn\u2019t happen.<\/p>\n
Sactwu complained: \u201cIn addition to being false, the representations made by Mr Hove were material, and made by him on behalf of the First Defendant with the intention of inducing the Plaintiff to enter into the subordination agreement\u2026Such error on the part of Kriel was reasonable and justifiable, entitling the Plaintiff to resile from and terminate the subordination agreement.\u201d<\/p>\n
According to Sactwu, using the subordination agreement to repudiate debts at this point \u201cexhibits bad faith, constitutes unconscionable conduct on the part of the First Defendant and would result in gross injustice or gross iniquity to the Plaintiff\u201d.<\/p>\n
The problem for Sactwu and Kriel is that the explicit terms of the agreement clearly opened the union to precisely this kind of danger. It doesn\u2019t once mention the listing of Sagarmatha. Instead, it records that the subordination \u201cshall remain in force and effect for so long only as the liabilities of the Company, as fairly valued, exceed its assets, as fairly valued\u201d.<\/p>\n
That means the subordination remains in place until SIM\u2019s hopeless insolvency is reversed \u2013 a very unlikely prospect after the Sagarmatha listing got scuppered. Had the listing gone ahead the subordination really would have disappeared anyway \u2013 but only because the debt itself would have been swopped for shares.<\/p>\n
Kriel maintains there is no way he could have suspected Hove was allegedly lying.<\/p>\n
\u201cSACTWU firmly rejects your implied assertion of carelessness and\/or incompetence… As its pleadings make plain, material but false misrepresentations were made to SACTWU and there was no reason at all for SACTWU to doubt or call into question the representations made to it by a senior SIM executive,\u201d he told amaBhungane.<\/p>\n
\u201cThere was certainly no reason at that time for SACTWU to disbelieve the representations made by the Chief Financial Officer of SIM.\u201d<\/p>\n
As a further defence he points out that a far larger and more sophisticated investor made the same mistake.<\/p>\n
\u201cThe GEPF [Government Employee Pension Fund, managed by the PIC] was the other significant loan creditor of SIM. There was certainly no indication from SIM that the GEPF had refused to sign its identical subordination agreement. It has only subsequently transpired that the GEPF has put in issue the validity of the execution of the subordination agreement executed on its behalf by [PIC\u2019s] former CEO.\u201d<\/p>\n
Considering the dire state of SIM\u2019s finances Sactwu may be hoping that the PIC doesn\u2019t beat it to the punch to try and reclaim its substantially larger claim on Iqbal Surv\u00e9\u2019s shrinking pockets.<\/p>\n","protected":false},"excerpt":{"rendered":"
Iqbal Surv\u00e9 has lost another longstanding ally \u2013 the union that lent him workers\u2019 money to help take over Independent Media. The Sactwu investment company is demanding their R300-million back, but Surv\u00e9\u2019s says his company doesn\u2019t owe them, or its major creditor the Public Investment Corporation, a cent.<\/p>\n","protected":false},"author":8,"featured_media":21051,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[2],"tags":[686,51,256,52,49,443,687,259,688],"class_list":["post-14682","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stories","tag-andre-kriel","tag-ayo-technology-solutions","tag-independent-group","tag-iqbal-surve","tag-pic","tag-public-investment-corporation","tag-sactwu","tag-sekunjalo","tag-south-african-clothing-and-textile-workers-union"],"acf":[],"_links":{"self":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/comments?post=14682"}],"version-history":[{"count":1,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14682\/revisions"}],"predecessor-version":[{"id":29980,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/posts\/14682\/revisions\/29980"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media\/21051"}],"wp:attachment":[{"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/media?parent=14682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/categories?post=14682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/further.co.za\/amabwp\/wp-json\/wp\/v2\/tags?post=14682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}