Application lodged for RBA’s business rescue

File picture: Denis Farrell

File picture: Denis Farrell

Published Feb 11, 2016

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Johannesburg - The trustees of Old Mutual’s Housing Impact Fund South Africa (Hifsa) have lodged an application with the South Gauteng High Court to place listed affordable homes builder RBA Holdings and its wholly-owned subsidiary RBA Developments into business rescue.

The application is expected to be heard on February 23.

RBA Holdings in 2014 entered into an agreement with HIFSA for a loan of R55 million, with the trust subscribing for 550 million shares at 10c each in the share capital of RBA. The company received the R55m in November 2014.

Hifsa said this week in a notice published on the Stock Exchange News Service that it was aware that for business rescue to succeed, the operations of RBA Holdings and RBA Developments must continue during business rescue proceedings and this would probably require an injection of working capital.

The trust said it was, within reason and subject to authorisation, willing to make available the necessary funding during the business rescue process as post-commencement finance.

Rescue prospect

In support of the application, Hifsa said that its trustees were “affected persons”because Hifsa was both a shareholder and creditor in the company, the company was financially distressed and was experiencing a cash flow crisis.

However, it said there was a reasonable prospect of rescuing the company if the affairs, business, property, debt and other liabilities and equity of the company were restructured. Alternatively, placing the company in business rescue would result in a better return for the creditors, or shareholders of the company, than if it was immediately liquidated, it said.

“It is just and equitable for financial reasons that the high court grant an order placing the company under supervision and commencing business rescue proceedings,” it said.

In regard to the financial distress being experienced by RBA Holdings, Hifsa said it was highly unlikely the company would be able to pay all of its debts as they became due within the next six months.

In addition, it said that it was likely that the company would become insolvent within the next six months as its assets would be severely impaired and exceeded by its liabilities.

Share suspension

Hifsa added that the company had informed the JSE about the business rescue application and requested the suspension of trading in its shares on the JSE with immediate effect.

RBA Holdings was established in 1997 and last October reported a narrowing in its operating loss to R6.7 million for the six months to June from the R17.08m loss in the previous corresponding period.

The company claimed the results of the company’s turnaround strategy were evident in the reduction in losses compared to the half-year results for its 2015 financial year.

It reported a net profit after tax of R1.8m for the six months to June last year, which was the first profitable reporting period by the company since the first half of 2012.

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