Simon Koch explains the mess at Simmers – or does he?

HILTON TARRANT: The ghost of Brett Kebble is still kicking and screaming - Simmer & Jack's BEE partner, an entity which used to be called Jaganda. Moneyweb's Barry Sergeant has written extensively about Jaganda. It's now called Xelexwa - being put into liquidation, being brought out of liquidation, attempt to get it re-liquidated, there's an opposing attempt to restore it to solvency. Barry Sergeant, Moneyweb's investigations editor joins us in the studio.
    Barry, what's going on?

BARRY SERGEANT: Hilton, just a broad backgrounder here. Gold - as we know today, the dollar price went to $1200. That's a record. Simmer & Jack, which was re-launched in 2005, in the past year or so its market value has gone from roughly $600m to half that. There's no gold stock, and Simmers globally is rated as tier-2 gold stock. There's no gold stock in the academy which has declined by 50% - Simmers is absolutely alone. A couple of years ago it spun off First Uranium, which is also South African, and that was floated in Toronto. This year the value of that stock has gone from US$1.2bn to $200-and-something. It's lost a billion dollars worth of value. There are roughly 100 uranium stocks around the world that you can look at. There is none that has underperformed to this extent. And at the root of this is this huge battle going on with the BEE partner, as you mentioned.

HILTON TARRANT: Simon Koch, CEO of Sovereignty Capital, is with us in the studio. Simon, looking at this, how do you fit into this? There's this battle between the BEE partner and Simmer & Jack, there's the background of extraordinary general meetings, directors being fired off boards, but at the root of this is a loan that JCI bought from Simmer & Jack way back in 2005, 2006. There were preference shares issued by the BEE company to JCI for this, and a lot of this now at stake is liquidation battles. There's alleged new liquidators being appointed. What's going on?

SIMON KOCH: Good evening. Firstly, let me say I'm the adviser to Vulisango and its subsidiaries and we have been at Sovereignty for a long time. I think a few years ago Barry Davison was on the show on the same matter. There are two simple issues here, and they are interconnected but they shouldn't be interconnected. The first issue is between Vulisango and JCI in respect to Xelexwa, and that issue is a very simple issue. JCI, through its common directorships, tried to sell a subordinated loan on a bankrupt company, R40m, for full value plus a bit, and taking a 20% kicker. However, this was all done prior to this controlling shareholder being notified of that, being Vulisango. So that issue is a separate issue.
    The other issue with Simmers is a more desperate issue, because the shareholding in Simmers that Vulisango has gone from, let's say when the battle started, 2008, from R1.8bn in value to less than R500m. And they've never sold a share; they settled with the management team, which was headed by Mr Gordon Miller and Mr John Berry in April or May 2006, whereby each of those members got 20m shares for free, and they walked away. And then they had to deal with JCI. However, the problem has arisen that the main deponents in all the affidavits in JCI's matter consist of Mr Berry, Mr Brunette and Mr Miller. So the bringing in of Simmers into this matter is purely something that JCI and the connection between those parties. Our issue regarding Simmers is a very simple issue. We don't believe the current board of Simmers has delivered. It has lost five or six directors in the last couple of weeks, they haven't been able to replace a director. First Uranium has some serious issues that need to be addressed, and that new management team chosen by shareholders, we believe, gives Simmers the best chance, and it's a very good company. But the share price doesn't reflect that.

HILTON TARRANT: Simon, there's a liquidation battle simultaneously going on with this underlying BEE shareholder. What's the status there?

SIMON KOCH: As part of the process to try and regulate what had been done, or try and uncover - the empowerment shareholders don't have auditors, lawyers and they haven't been in business for 40 years to understand all these intricacies. The easiest route for them was, because of an edict or arrangement that was made for one of the Simmers rights, which said they had to have 26%, they couldn't sell their shares and pay creditors because of the previous battle. So they were below that level. And at the same time they went to court and applied on a just and equitable basis, and at that stage also then showed that in this first transaction there were a number of frauds committed. They were hoping the court would decide that, rather than having to go it alone. However, as of yesterday Vulisango have decided that by keeping the company in liquidation and the creditors, because it's taken two years from a  final order to get to not even the first creditors meeting, OK, and now its gone back to provisional order, they decided that it was better to pull it out of liquidation, apply to pull it out of liquidation in order that they can vote their shares at an EGM on behalf of Simmers and also on behalf all Simmers shareholders to get the deadlock removed from Simmer & Jack so it can go forward.

HILTON TARRANT: Is that feasible, pulling it out of liquidation and now restoring it?

SIMON KOCH: As of tonight, I heard there was a letter from JCI - didn't want us to pull it out of liquidation. They've argued for two years to pull it out. I haven't seen the letter, but I heard tonight they don't want us - but it's very interesting, because the liquidators called for an EGM, they had to. But the day they found out that we have been moved to a provisional, the same liquidators were there. They then tried to stop the EGM on the basis that they said the liquidators had no authority to call it. But 14 days had passed, and if you look at the Companies Act, that means that if directors don't call the meeting shareholders can. But because the liquidators were changed, the shareholders can't, and now shareholders have to recall the meeting. And it happened to be the same three directors or guys that were part of the JCI cabal who gave the statements to them. So you can take what you want from that.

HILTON TARRANT: Simon, where to from here?

SIMON KOCH: Well, hopefully some of the other shareholders tomorrow will call for an EGM, and hopefully we will be able to vote our shares and have a new board, which I think, considering all the mess, and considering the amount of noise, etc, the board that has agreed to come, we as Simmer shareholders should be thanking our stars on a daily basis. It's an unbelievable board. And as I said to a shareholder, please tell me which one, which board in this country in mining is better than this board. So we are very lucky.

HILTON TARRANT: We'll have to see how this one plays out. Simon Koch, CEO of Sovereignty Capital, and Moneyweb's investigation editor, Barry Sergeant.
    David Shapiro, you just can't make this stuff up!

DAVID SHAPIRO: No. This is Days of our Lives, Dallas, Desperate Housewives, all put into one show!

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