One of KwaZulu-Natal’s biggest construction groups, Stedone, is on the brink of financial collapse and a major creditor, the Industrial Development Corporation (IDC), is trying to force it into liquidation so that an investigation can be conducted into what happened to the R240 million loan it advanced.
The companies within the group have been under “business rescue” since April this year.
And, while an “investor” has been found to take over, the IDC says it believes the companies cannot be saved.
In papers filed yesterday in the Durban High Court, IDC legal manager Marcus Sen yatsi said an investigation was necessary into “suspicious financial activity” including how its loan of R240m, granted in November last year, was spent in just six months.
Senyatsi said a R10 million payment from the Coega Development Corporation was received on Saturday, April 6, this year. Two days later, on April 8 – when the business rescue commenced – it had disappeared.
Senyatsi also accuses the man in charge of the business rescue plan, Karl Gribnitz, of creating a “contrived and unsustainable foundation” for the rescue plan which includes “exorbitant and quite extraordinary” remuneration for himself.
The urgent court application – seeking to set aside the approval to sell to Trini Trading Ptd Ltd – specifically involves the civil, development and investment companies.
When the case was called before Judge Nompumelelo Radebe, advocate Antonie Troskie, for Trini, said the case was “commercially urgent” because it involved “a lot of jobs and a lot of money”.
The Mercury has previously reported that several low cost housing projects, for which the company had tenders, had been stalled and the provincial government was considering cancelling the contracts as a result.
Cited as respondents in the court application are 266 creditors hoping to be paid.
Senyatsi said it was the IDC view that the three companies were in such terrible financial difficulty that liquidation was inevitable.
But Gribnitz had instead proposed a rescue plan which, Senyatsi said, “ignored significant claims and required creditors to abandon their security or majority portions of their claims”.
Senyatsi said the IDC and another creditor, Grindrod, had requested that meetings held with creditors to vote on the rescue plan should be adjourned.
But, after deeming “incorrectly” that any adjournment would have to be approved by a 75 percent majority and then giving votes to those who should not have voted – including directors Brian Bell, Elvis Dube and Fritz Ackermann – the adjournment was denied and the deal with Trini was approved.
He said the rescue plans provided that Gribnitz be paid R2 000 an hour, “success fees” of more than R2m and that he would become chairman of a holding company for which he would also be paid.
Senyatsi said after first accepting the IDC’s claims – which included a claim to ceded shares – Gribnitz had now rejected them.
“The plans are not viable… they provide for an injection of inadequate working capital. We believe at least R240m is needed to survive – and they depend upon the misclassification and consequent rejection of the largest claims against the company.”
The IDC wants the approval of the rescue plans set aside, and says this must be decided urgently.
The matter was adjourned until this morning to set dates for argument.
Gribnitz, represented by advocate Rob Mossop, is opposing the application. - The Mercury