A consortium has thrown Cida City Campus a last-minute lifeline in the form of a multimillion-rand proposal to rescue South Africa’s only fee-free university, which is currently closed and threatened with liquidation.
Instead of recommending final wind-up of business of the institution, provisional liquidators have invited creditors to a meeting next week to vote on the proposal to salvage the facility.
Johannes Muller and Eugene Januarie of Tshwane Trust, whom the Johannesburg high court appointed as joint provisional liquidators of Cida, have sent creditors a circular detailing the proposal.
The circular, which the Mail & Guardian has seen, details the multimillion-rand rescue offer from the consortium comprising Africa Integras, the Cida Empowerment Trust and the Africa Alliance of Young Men’s Christian Associations. It has offered to invest millions in the institution and will operate as Cida Holdings.
“Cida Holdings has approached the provisional liquidators with the intention of returning the company to solvent circumstances and facilitating the resumption of the business of the company for the benefit and interest of the students and employees,” said the circular.
‘Salient features’
The “salient features” of the proposal to rescue Cida, according to the circular, are that three major creditors agree to write down their claims by significant percentages. The City of Johannesburg is being asked to write off 100% of its R9.6-million claim.
The South African Revenue Services is being canvassed to write off 65% of its claim; Cida owes it R4.9-million. The Joffe Charitable Trust is being asked to agree to write off 75% of the university’s debt.
With the big three out of the way, provisional liquidators anticipate that the claims of the concurrent creditors total about R5.289-million. Just more than R3.4-million “shall be available for distribution to the concurrent creditors”, said the circular.
Cida was initially said to owe creditors about R30-million, a debt that led to its directors applying to the courts in 2013 to have the institution placed under administration. When this failed, Cida went into provisional liquidation and finally closed the gates in December.
Groundbreaking institution
The Lyndhurst-based institution, which offers a bachelor of administration degree, had about 400 students when it suspended operations.
Cida burst on to the scene in 1999 as a groundbreaking institution to uplift thousands of poor black matriculants. An institution whose sustainability depended on donors, its fortunes dwindled after founder Taddy Blecher, an accomplished social entrepreneur, resigned in 2007.
It cracked after years of mismanagement and failure to attract donors following Blecher’s departure.
The new proposal will be adopted if 51% of creditors in attendance vote in its favour. It would then become an order of the Johannesburg high court “on or before” September 30.
“Cida Holdings shall [then] resume business of the company to facilitate resumption of the provision of tertiary education to the indigent students immediately upon the sanction date or upon the agreement with the provisional liquidators upon approval of the proposal by creditors,” said the document.
Provisional liquidators warned that if any of the conditions to the proposal fail, Cida would be placed in final liquidation. “And in such a scenario, the provisional liquidators submit that the creditors will receive a reduced dividend.”
But if all goes well, “the company will be discharged from provisional liquidation resulting in the resumption and continuation of the business of the company and the continued employment of the employees”.
“The creditors will receive their payment/dividend in relation to their claims sooner than would have been the case if the winding-up of the company was to proceed to finality.”
Confident of acceptance
Andrea Christie Pizziconi, responding from New York on behalf of Cida Holdings to the M&G‘s emailed questions, said they were confident the latest offer would be accepted.
She said their proposal brings in more than R100-million in “socially responsible financing for Cida from several highly credible international and local institutions”, including Africa Integras, Cida Empowerment Trust, African Alliance of YMCAs and the US government’s Overseas Private Investment Corporation.
“Our consortium is very excited to be able to present to Cida’s creditors a solution that not only settles with creditors equitably but also provides Cida with the kind of material investment it needs to emerge as the international model for economically accessible high-quality higher education it was originally created to become,” said Pizziconi.
“This funding will revitalise the campus facilities, repay creditors and invest in strengthening the human capital and academic offerings at Cida. In particular, we will focus on providing substantial holistic support for Cida’s students and staff to ensure their long-term success.”
Loan-based institution
Cida will no longer operate as a free institution, but a loan-based institution. The circular said Cida Holdings would facilitate “financial support for the students, in the form of affordable loans and scholarships”.
The company would also “facilitate the employment of students in part-time capacities to assist the students with their financial obligations in respect of living expenses”, according to the document.
But it will remain a home to poor students, Pizziconi said. “Our investment also allows all students access to a combination of affordable funding options including support from the Cida Empowerment Trust, affordable loans, some ongoing donor support and paid part-time internships. These various options ensure all students, regardless of their economic means, can continue to afford to attend Cida.”
The new model is meant to ensure the institution’s long-term self-sustainability. “Going forward, Cida will not be at risk of funding shortfalls if donor support wanes and we will be able to expand enrolment back up to Cida’s historic levels, allowing access to a newly revitalised Cida for even more economically disadvantaged students,” said Pizziconi.
Student Mpume Nkabini said she couldn’t wait to go back to the institution and complete her degree. “We have been sitting home the entire year doing nothing. We wish to go to class as soon as possible, even if it takes pushing to cover a semester in December.”
Pizziconi said they “hope to reopen Cida as soon as possible so that we can start to get the existing Cida students caught up on the time they’ve lost this year so far.
“The welfare of the students and ensuring they are able to get their studies back on track as soon as possible is by far our top priority in the near term.”