Cape Town - Independent Media chief executive Takudzwa Hove on Wednesday testified that he never pressured SA Clothing and Textile Workers’ Union (Sactwu) general secretary André Kriel into signing a contentious investment agreement that the union now alleges was a loan.
Hove was giving evidence in the Western Cape High Court in a case in which Sactwu has sued Independent Media Consortium (IMC), formerly the Sekunjalo Independent Media Consortium (SIM), for R300 million, which it claims is the capital plus interest on its R150m “loan”.
The matter goes back to 2013, when Sekunjalo Investment Holdings (SIH) decided to buy the Independent Media publishing group from its then-Irish owners.
SIH brought on board partners, including Sactwu, which was looking to increase its existing footprint in the media space.
Through its investment arm, handled by Kriel, the union decided to invest about R150m into Independent News Media South Africa, therefore becoming part of the consortium, a special purpose vehicle created for the occasion, which made the successful bid for the company.
When the final agreement was signed, Sactwu requested to change the equity into a loan of R150m, having suffered a severe setback as a result of a failed investment elsewhere.
The court case, being heard by Acting Judge Michelle O’Sullivan, is set to determine, among other things, whether or not Kriel had the authority to sign a subordination agreement.
A subordination agreement is defined as a legal document that establishes one debt as ranking behind another in priority for collecting repayment from a debtor.
This agreement said the union’s R150m investment would be paid back only when the media group’s assets exceeded its liabilities.
The investment was later swopped for shares in Sagarmatha Technologies, in 2017.
Kriel had testified earlier that he had been pressured into signing the subordination agreement and he believed the swopping for shares was a temporary arrangement on the understanding that the money would be paid back.
“I had no mandate to sign a subordination agreement with a never-ending time frame,” Kriel said.
He also testified that while he had read the two-page agreement before he signed it, he had consulted Hove via a phone call on the Friday night to ascertain exactly what it all meant, before signing on the Monday.
In his evidence-in-chief, Hove said he had not found it unusual that Kriel had called him at night seeking clarity on the agreement.
He also said nothing had prevented Kriel from consulting with an attorney about the agreement.
He told the court that to the best of his knowledge, Kriel had the designated signing authority to enter into any and all contracts on behalf of the union.
Hove’s cross-examination is expected to end this morning, after which the advocates will sum up their arguments, leaving the matter to the court to decide.