The National Union of Metalworkers of South Africa (Numsa) is heading to the Gauteng high court in Johannesburg on Tuesday to try and prevent the sale of assets of VR Laser Services.
City Press reported in July this year that VR Laser Services, one of eight Gupta family-owned companies under business rescue, have been “gutted”, according to the company’s former financial manager.
At the time the creditors voted for a controlled winding down of the company under the direction of the rescue practitioners after an offer from a company called Blain Capital Solutions to inject R11.7-million fell through.
Numsa’s urgent application is against VR Laser Services, the two business rescue practitioners and other respondents including the Bank of Baroda and the South African Revenue Service (Sars).
Numsa, which has 146 members who had been employed by VR Laser until recently, wants the court to set aside the business rescue plan for VR Laser dated June 11 2018 as a matter of urgency. The union also wants a creditors’ meeting to be convened to vote on the adoption of an amended business rescue plan.
The union, furthermore, wants to prevent the business rescue practitioners from holding an auction for the sale of the plant and machinery belonging to VR Laser, pending the outcome of the proposed creditors meeting. It also wants a halt on the disposal of any assets of VR Laser pending the outcome of such a proposed meeting.
In his founding affidavit for the application, Numsa secretary general Irvin Jim says if the business rescue practitioners were to sell the VR Laser assets as intended on September 20, it will render the company incapable of returning to a solvent footing, leading to the permanent loss of employment by the Numsa members.
According to Jim’s affidavit, a consortium has submitted an offer to the business rescue practitioners for the purchase of the shares of VR Laser. In terms thereof, the consortium will pay the debts of VR Laser in full, with one of the consequences, in Jim’s view, of saving the jobs of the Numsa members.
Jim claims the business rescue practitioners have refused to postpone the sale of the plant and machinery and refused to convene a meeting so that creditors can vote on the new business plan relating to the offer by the consortium.
‘Not a consortium’
Jim’s affidavit states that on September 5 Crede Capital submitted its proposal to purchase.
After this article was published, Crede contacted media to say it was an independent financial services firm acting as a transaction advisor — a corporate finance advisory firm — on behalf of Thata uBeke Manufacturing. The latter is trading as TUB, represented by Ntokozo Sabelo.
While Jim’s affidavit refers to a consortium comprising the Public Investment Corporation (PIC), two Geneva-based hedge funds and Thata uBeke Manufacturing and TUB; Sandile Sokhela, CEO of Crede, told media this was incorrect.
The term consortium could be misconstrued to suggest that the prospective investors had committed themselves to the transaction as equity partners and confirmed their willingness to provide funding, he said.
Further, he added, those named in Jim’s affidavit were not a consortium but rather a few prospective investors singled out from several. “The prospective investors that were approached by Crede do not form part of the ‘consortium’. They were approached amongst other potential investors to consider the opportunity, subject to a due diligence process and internal approval processes,” he said.
“The term consortium was used in the Letter of Interest to include employees that are owed remuneration as partners in the prospective transaction. The settlement of employee liabilities could have been resolved by means of the creation of an equity participation (employee share scheme) assuming the acquisition was successful,” he added. — Fin24
Update: On Tuesday, the High Court in Johannesburg threw out Numsa’s application to try and prevent the sale of assets of VR Laser Services. Judge Selemeng Mokose ruled that Numsa had failed to present a convincing argument to justify the urgency.
Update 2: This article was updated at 11:20 on Wednesday September 19 to reflect comment from Crede Capital Partners about its role.