African Global Holdings (AGH, formerly Bosasa) director Jared Watson on Friday filed papers in the High Court in Johannesburg to have the company’s recent massive auction of all its assets declared illegal.
If the latest legal bid from the embattled and controversial company is successful, it would create the mother of all headaches for the company’s liquidators, who would have to recover hundreds of items, particularly a fleet of vehicles, that were sold under the hammer at the start of this month.
They could also be held personally liable for an amount of more than R1 billion, which the company feels is what the assets are actually worth, while acknowledging the liquidators wouldn’t be able to pay it and therefore only a setting aside of the auction would be practical.
The assets were sold in what Watson describes as a “fire sale” for about R100 million.
On the first day of what commentators called the “auction of the decade”, competition to buy numerous vehicles, furniture and other moveable assets appeared to be fierce, but by the time Park Village Auctions got around to to selling the big-ticket items, especially the properties and a copper plant, the headlines were dominated by how cheaply they were sold for.
According to the company’s own paperwork, the replacement value of the massive Lindela Repatriation Centre in Krugersdorp was at least R244 million, though it would probably cost R300 million to build it again from scratch today.
It initially sold for R60 million to an unknown bidder from Limpopo, but yesterday the department of public works announced it was exercising its right of first refusal to purchase the facility for the same amount.
Bosasa’s head office, a sprawling campus in Krugersdorp with a command and control centre, armouries, call centre, backup power systems and even a testing centre for fencing products, sold for just R14 million to Fidelity Security.
AGH had valued it at R168 million.
In Watson’s court papers he claims Fidelity had been planning to buy it for eight months.
A copper plant valued at more than R260 million sold for just R11.5 million at auction.
Watson, who is also the executor of the estate of his late uncle and the group’s CEO Gavin Watson, has asked the liquidators for the names of everyone who bought anything at the auction so that they can be added as respondents in the case.
He has accused the liquidators of acting outside their mandate by not consulting with the company’s directors and obtaining their consent for the auction, which he contends they should have been compelled to do since they remained provisionally appointed despite a Supreme Court of Appeal judgment last month that kept the group in liquidation.
On the eve of the auction, Watson also applied for business rescue for AGH, which he contends – further citing company law – should also have put a stay on the auction itself.
Watson, a chartered accountant, believes several parts of the group can continue to be run as going concerns in the private sector.
According to him, AGH owes none of its creditors any money any more, has discharged its duties to staff (the group now has only 50 employees from the original 4,500) and the claim of hundreds of millions from the SA Revenue Service in allegedly unpaid taxes, penalties and interest is not yet proven.
The group was in any event willing to sell mining shares valued at R300 million.
“As far as we know, Bosasa owes only about R500,000 in taxes,” Watson told The Citizen, a claim he repeated under oath in court papers. He added there was also R72 million in the company’s bank account under the liquidators’ control.
He has alleged that the provisional liquidators rushed through the auction since they stood to make as much as 10% in commission fees, but stood the risk of not being appointed as the final liquidators, and therefore the chance of handsome payment.
All three primary provisional co-liquidators, Cloete Murray, Ralph Lutchman and Tania Oosthuizen, were sent a list of detailed questions for their side of the story, but only Murray responded – by casting aspersions on The Citizen’s intentions.
He suggested “you have no understanding (not even limited) of what liquidators do and how they go about exercising their legal duties”.
He advised us to “inform yourself” on the Companies Act and the Insolvency Act.