Durban - Today marks the end of the road for KwaZulu-Natal-headquartered listed company Chemspec with an urgent high court application for its liquidation which will see about 430 people across the country lose their jobs.
The factories had already been shut down and staff sent home before this morning’s winding-up application in the Durban High Court which was predicted after one of its financial bankers called in a R74 million loan given to keep the 58-year-old business going while under business rescue management.
But what appeared to be a good offer – one which would guarantee jobs and the company’s continued presence in South Africa – was scuppered at the last minute.
And its former chief executive Strath Wood – who left South Africa under a cloud of debt and whose estate is under threat of final sequestration – could have put the final nail in the coffin through his involvement in entities which own the Canelands (Verulam) property where the company is based.
In his affidavit filed with the court, business rescue practitioner Pierre Berrange says the offer from an international investor to buy the business as a going concern for R175m was conditional on being able to lease the property from Zevoli 243 Pty Ltd.
Interests
Both Wood and his family trust have interests in Zevoli and he sits as a director on its board.
Berrange says: “Notwithstanding several attempts by the potential buyer and ourselves to mediate an acceptable compromise regarding the lease, the parties were unable to reach an agreement.
“The offer has now been withdrawn,” he said.
Wood now lives in the US and claims to be a “man of straw” with no assets.
The company – which has facilities all over South Africa – was placed into business rescue by its directors in March this year after they reported cash flow problems.
Berrange and Richard Ferguson were appointed as the business rescue practitioners and dealt with several interested parties, but in the end it boiled down to just the one.
In his report, Berrange said the company’s revenue for the year ending in March was about R600m.
It had assets of about R170m, but its liabilities exceeded that by about R125m.
Its monthly net loss was about R3m.
“It is factually and commercially insolvent,” he said.
The Mercury understands that the staff complement has been trimmed from about 900.
Berrange said because of the uncertainty of business rescue, several key people “vital to the success of the business” had left and more were bound to leave.
“As was expected, some of its customers have become concerned about product and have begun sourcing from other suppliers.”
THE MERCURY