Johannesburg - Empowerment shareholders in TopTV’s parent company, On Digital Media (ODM), have gone to ground as the Industrial Development Corporation (IDC) pursues a lawsuit to recover R750 million from fellow shareholders.
The IDC wants its money back after ODM filed for business rescue last year.
The litigation is targeted at Kopano Ke Matla, the investment arm of trade union federation Cosatu, and First AOne Trade & Invest, along with First National Media Investment Holdings, which hold 27.87 percent in ODM.
First AOne Trade & Invest is a black economic empowerment holding company and owns 10 percent of ODM.
It comprises Lereko Investment Holdings and a broad-based women’s group.
Kopano Ke Matla’s 20 percent interests in ODM are housed in Red Gold Investments. The IDC holds an 11.13 percent stake in ODM.
Repeated attempts to gain comment from Cedrick Mampuru, Lereko’s chief financial officer, and Collin Matjila, the chief executive of Kopano Ke Matla, were futile.
The IDC is seeking R293m from First National Media, which had provided for this debt. The IDC also wanted R161.8m from First AOne Trade & Invest and R297.3m from Red Gold Investments over a first preference share subscription agreement and another deal.
TechCentral, an online publication, first broke the story.
Mandla Mpangase, the spokesman for the IDC, said yesterday that the investment parastatal had not entered into settlement negotiations with the shareholders.
“The IDC has been approached by some shareholders in ODM. However, none of the proposals presented were acceptable to the IDC.”
He declined to elaborate but added: “The IDC is exercising its right to litigate both in accordance with the terms of the agreement and our policies. This is not unique to the specific transaction. We have exercised this right in similar circumstances.”
Today an application to interdict ODM and its business rescue practitioner, Peter van den Steen, from implementing the business rescue plan will be heard in the South Gauteng High Court. The applicants are First National Media and Mergan Moodley, who collectively hold 21.1 percent of ODM.
They claim that the plan would be implemented unlawfully and prematurely and would be disadvantageous to ODM, its creditors and employees, according to TechCentral.
ODM and Van Den Steen are not commenting until a media briefing on Thursday to provide clarity on the way forward.
In terms of the plan, China Star Times, which was a winning bidder for a 20 percent stake in struggling ODM in April, would gain a 65 percent economic interest in ODM.
Mpangase said the IDC had “no reason to believe Star Times will not be able to meet its obligations in terms of the business rescue plan”.
“If the business rescue plan was to fail, the business rescue practitioner can exercise one of the two options: to look to an alternative investor or recommend the liquidation of ODM,” he added.
ODM launched as the country’s second pay-TV provider in 2010. Another government-backed empowerment financier, the National Empowerment Fund, concluded a R100m equity investment in ODM and warehoused its stake in First AOne Trade & Invest.
Asked whether the IDC regarded failed TopTV as a good or bad investment, Mpangase said: “While the financial return is still questionable, we view this as a major contribution in the pay-TV market, introducing a new player in the market – which is good for competition.”
He said ODM was a potentially good business “provided there is proper support – both financially and technically. We will consider any future involvement in the market, based on its own merits.” - Business Report