Johannesburg - The R450 million media deal involving businessman Mzwanele Manyi and the Gupta’s Oakbay Investments is shrouded in controversy, with leading business experts casting doubts on whether South African banks would approve of it.
There were mixed reactions regarding the deal, with some suggesting that Manyi could have been used as a front, especially after the Guptas came under attack from several quarters for alleged state capture.
The controversial Gupta family, who are close friends of President Jacob Zuma, have also been dumped by the country’s top four banks.
And India’s Bank of Baroda has given the Guptas until the end of next month to close their accounts - a move that has caused panic among staff at ANN7 tv station and The New Age newspaper over how they will be paid.
On Monday, an upbeat Manyi told The Star about the transaction, saying he had clinched it through a vendor-financing agreement, whereby “you ask the owners to loan you money to buy this thing”.
“This kind of financing is done locally and internationally. It is not unique. But what it does is it shows that the sellers are confident that I’ll be able to pay them back,” he said.
The former government spokesperson was hoping to raise the money through the private and public sectors.
“Right now, I’m the poorest man in the country, because I owe somebody R450m, but I should be able to come right. I will call on the government and business to support this initiative. Their support will be crucial,” he said.
Manyi has vociferously defended the Guptas, saying they were not the enemy, white monopoly capital was. A trove of leaked e-mails known as #Guptaleaks showed that Manyi had sent his CV to a Gupta lieutenant, reportedly in the hope of being appointed to a parastatal.
On Monday, Oakbay Investments announced that they had clinched a deal with Manyi, through his company, Lodidox Management, for the sale of its shareholdings in its two media businesses: Infinity Media (which operates 24-hour news channel ANN7) and TNA Media (which publishes The New Age newspaper) for a combined sum of R450m.
Oakbay acting chief executive Ronica Ragavan said the sale, which was clinched through a vendor-financing agreement, was part of the company’s commitment to, “preserve jobs and provide certainty to over 7500 hard-working employees throughout the country”.
The sale, said Ragavan, would allow the shareholder the time to focus on “clearing its name in the face of unfounded media allegations”.
Business analyst Ajay Lalu, the managing director of Black Lite Consulting, a 100% black-owned empowerment group, said: “In layman’s terms, a vendor-finance agreement is when the seller assists the buyer to acquire something that they (seller) own, on terms that are better than the banks."
Another business analyst, who spoke on condition of anonymity, said he did not think Manyi was being used as a front by the Guptas.
“Even if Manyi manages to get a bank that can do business with them, I don’t think the banks will want to do business with anything related to the Guptas.”
Manyi, however, lashed out at his detractors.
“The Guptas can speak for themselves. I just saw an opportunity to buy a business that was in a toxic environment. I will put it onto a growth path. It’s a major opportunity, because the employees there were sort of under siege, not knowing what’s going to happen,” he said.
“I hope this transaction will provide some certainty about what’s going to happen. Their jobs are guaranteed and business will continue as usual. Everybody should be happy about this development,” he said.
Manyi said the transaction was a good story for the country.
“The government must put its money where its mouth is. This deal is the best representation of radical economic transformation - the media ownership has changed. If the government can’t support this, then I don’t know what they would support,” Manyi said.
Small Business Development Minister Lindiwe Zulu congratulated Manyi, saying that, “we need to support him in this venture”, and that it was high time blacks started getting into the media space.
“As a black person, I’m very excited that somebody of his calibre has been bold enough to actually take on something this serious. It’s something that needs to be supported by all of us. That’s my view,” said Zulu.
She described Manyi as a “very vocal person, especially on issues of black empowerment”.
PAC spokesperson Kenneth Mokgatlhe also congratulated Manyi, saying they were humbled to see Africans taking control of media ownership, adding that they hoped Manyi was not fronting.
“Our law-enforcement agencies should ensure that fronting is prohibited and that those committing it are punished,” he said.
When asked if they knew about the transaction, Competition Commission spokesperson Sipho Ngwema said: “No, we do not have this transaction in our records.”