Durban - The negative publicity of being associated with the Gupta family and former president Jacob Zuma is what sounded the death knell for the AfroVoice newspaper.
This is the submission of Mzwanele Manyi, owner of the newspaper formerly known as The New Age, in an urgent application for liquidation on Monday.
Manyi, and five other directors of his company, have asked the high court in Pretoria to urgently place their subsidiary TNA Media, publisher of AfroVoice, under liquidation, saying it can no longer be rescued.
In his affidavit, Manyi said AfroVoice was commercially insolvent and “there are no prospects for the rescue of the company under the prevailing circumstances”.
“As a result of the (company’s) dire financial position, it currently conducts business in insolvent circumstances and consequently the directors have a legal duty to cease all operations and further to act in the best interest of all stakeholders, including the body of creditors, its employees and shareholders,” Manyi said.
AfroVoice’s operational debt climbed to R23.2 million at the end of last month, forcing directors to suddenly close the paper down. Staff members, including journalists, were given no prior notice.
Between February and June, the paper’s revenue declined from over R5.1m “to a mere R255 650”, Manyi said.
The dramatic decline was caused by sudden withdrawals of subscriptions and advertisements, and indefinite suspension of TNA business briefings by the SABC.
During this period, the North West and Free State provincial governments also cancelled their bulk subscriptions, while the troubled Gupta-owned Westdawn Investments did not renew advertising that brought in about R1.7m a month.
Koornfontein mine, also Gupta-owned and under business rescue, pulled out of a sponsorship deal that made TNA about R1m a month.
Manyi now wants a liquidator appointed to take over control of the company’s assets.
The assets will be sold in the interest of creditors.
“The applicants have decided to approach this honourable court on the grounds of urgency to ensure proper protection of the respondent’s assets,” Manyi said in the affidavit.
The creditors included news agency AFP, Allied Publishing, Bidvest Steiner, Gallo Images, Independent Newspapers, Vodacom, SABC, SizweNtsalubaGobodo and Sars.
Manyi acquired The New Age from the Guptas late last year. The paper was known as a mouthpiece of the controversial family and Zuma.
It was already operating at a monthly loss of almost R4.8m when the Guptas handed it over to Manyi through a R450m vendor financing deal.
Manyi said he had believed AfroVoice “would be able to regain confidence in the marketplace and in so doing afford (it) the opportunity to recover financially and once again become financially profitable”.
He said he had every reason to believe the paper would “divorce” itself from the state capture saga and the Gupta family. But these efforts had failed, Manyi said.
“Despite the applicant’s best endeavours to distance the respondent from its past, lingering perceptions that the (newspaper) was still linked to its former owners unfortunately remained.
“Regrettably, the (The New Age’s) association with the business activities of the Gupta family through Oakbay Investments created a negative perception.
"As a result of the negative publicity during the past three years, relating to the historic relationship between the Gupta family and former president Jacob Zuma, and the various business operations of the Gupta family, the business operations of the (paper) suffered much negative publicity and criticism, which unfortunately led to a steady decline in revenue.”
The Communication Workers Union planned to join the liquidation hearing in court in the interest of AfroVoice employees, its general secretary Aubrey Tshabalala said.
“We’re striving to get the best benefits out of that process,” he said yesterday. “Under normal circumstances when you retrench a worker, there are packages. I don’t want to spoil the cake, but those are the things we must go and argue for before the judge.”4