Highveld in legal dispute with Sasfin
Evraz Highveld Steel and Vanadium Limited announced, as it is required to do in terms of section 145 and 146 of the Companies Act, 71 of 2008, that the board’s appointed business rescue practitioners have launched an urgent High Court application against Sasfin Bank Limited.
In the application, which was launched on Friday, May 22 the business rescue practitioners urgently applied to the High Court to obtain an order against Sasfin to, inter alia, release the debtors ceded to Sasfin to enable the business rescue practitioners to procure funding from the Industrial Development Corporation of South Africa Limited (IDC).
In terms of the application, Sasfin is required to respond to the application by 17:00 on Monday, May 25. The business rescue practitioners will have a right to respond thereto. The application was due to be heard on Thursday, May 28. The application is available on the company’s website.
The dispute relates to an Invoice Discounting Agreement that was terminated by Sasfin when Highveld’s Business Rescue Proceedings, commenced on April 13.
Highveld disputes that Sasfin is entitled to retain the debtors’ book of Highveld after having collected all the capital and interest outstanding on the facility.
In addition, Sasfin has also imposed R36-million (including Vat) in penalties arising from its cancellation of the agreement and have retained R35-million collected from the Highveld debtors, which penalties are disputed by Highveld.
Highveld has tendered to pay under protest the outstanding amount claimed of less than R1-million, as this amount is reflected on the latest Sasfin statement, provided that Sasfin releases the cession of debtors. That tender was refused by Sasfin and has resulted in the urgent application being launched. A separate action will be instituted by Highveld against Sasfin shortly to set aside the purported penalties and recover the amounts concerned.
These actions have severely compromised Highveld’s ability to access the cash flow required to save the business and has potentially prejudiced the conclusion of a loan arrangement with the IDC, which requires Highveld to first procure the unconditional release of the cession of debtors.
Highveld remains uniquely positioned as a vertically integrated global steel and vanadium producer with a significant turnaround potential.
The urgent High Court proceedings by Highveld have unfortunately become necessary in the interests of all Highveld’s stakeholders. The refusal by Sasfin to release the cession and the imposition of purported penalties by Sasfin, is not only detrimental to the 3 700 direct employees and the range of suppliers in an economically distressed Mpumalanga province, but also highly prejudicial to the extra-ordinary efforts to raise funding and the collective serious endeavours of many stakeholders, including, inter alia, government, employees, suppliers, state owned enterprises, to save Highveld.
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