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Investors may receive a fraction of their original HS investments

An unnamed ‘third party’ will make an offer to settle investors’ claims against Orthotouch and Zephan with Accelerate shares.

­­Former investors in the failed Highveld Syndication (HS) schemes will in March next year be presented with a final settlement offer that will offer them shares in the Accelerate Property Fund as full and final settlement of their claims. 

Read: Orthotouch BRP aims to negotiate a ‘concrete’ offer for investors

This was revealed on Thursday at the creditors’ meetings of Orthotouch and Zephan after property magnate Nic Georgiou put both companies into business rescue on November 7.

Read: Georgiou puts Orthotouch and Zephan into business rescue

Jacques du Toit of Du Toit Business Rescue Practice, the business rescue practitioner of Orthotouch and Zephan, said at the meeting that if investors and other creditors reject the offer, he will put the two companies into liquidation. However, based on the information Du Toit disclosed at the meeting, investors may only receive a fraction of their original investments. According to Moneyweb’s calculations, it could be as little as 3.3%.

Accelerate is a listed company run by Georgiou’s son Michael, who is also the largest shareholder in the company.

Business rescue practitioner Jacques du Toit. Image: Supplied

Creditors’ meeting

Around 100 investors attended the meeting in Johannesburg where Du Toit said the business rescue process will consolidate the remaining assets of Zephan and the HS companies, and that these assets will be available for distribution to the investors and creditors of Orthotouch and Zephan.

He said a provisional valuation of the properties remaining in Zephan amounts to around R130 million, but he did not provide a valuation for the three properties that remain in HS 16 and HS 18.

Hans Klopper, a corporate lawyer and business rescue practitioner. Image: Supplied

Du Toit added that Georgiou and Hans Klopper, the business rescue practitioner of the HS companies and a former director of Orthotouch, agreed to the grouping of these assets.

Read:

The peculiar case of the Picvest billions (Part 1) (Background)

The peculiar case of the Picvest billions (Part 2) (Background)

The peculiar case of the Picvest billions (Part 3) (Overvaluation of properties)

The peculiar case of the Picvest billions (Part 4) (Property transactions prior to HS companies being put into business rescue)

The peculiar case of the Picvest billions (Part 5) (Disposal of properties contradicts the intent of the business rescue plan)

The peculiar case of the Picvest billions: Part 6 (The disposal of properties to Accelerate)

Third party

However, Du Toit said a “third party” indicated it will “come to the party” and offer Accelerate shares to investors and creditors “for full and final settlement of their claims”. The exact details of the offer will form part of the business rescue plan which will be published on March 31 next year.

However, Du Toit said the offer would consist of approximately 123 million Accelerate shares, although the final number is to be confirmed. “The Accelerate shares will form the ‘pot’ available to be split pro rata among creditors relative to their claims. So, if your claim is 10% of the total claims, you will receive 10% of the pot. It the claim is 1%, you will get 1%,” he said.

In return for the offer, the third party will take ownership of the remaining Zephan and HS properties.

Du Toit added that although Accelerate shares are currently trading at R1.70 a share, the net asset value (NAV), as “calculated by the JSE”, is R7.99 a share.

Liabilities of Orthotouch and Zephan

Du Toit also revealed that according to the latest calculations, Orthotouch’s total liability to investors and creditors is around R3.9 billion, which is significantly lower than the amount of R5.4 billion Georgiou disclosed in his submission to the Companies and Intellectual Properties Commission (CIPC). He did not provide an updated number of the liabilities of Zephan, which was listed as R2.4 billion in the CIPC notice.

Collectively, and with the current available information, the total claims against Orthotouch and Zephan are R6.3 billion.

Du Toit stressed that these claims still need to be verified and all creditors need to submit proof of their claims as part of the process.

What can investors expect to receive?

According to the information and estimates Du Toit disclosed at the meeting, and depending on the prevailing Accelerate share price, investors can realistically expect to receive around 3.3% of their original HS investments. This calculation is based on the disclosed liabilities of R6.3 billion and the value of the 123 million Accelerate shares that will be available for pro rata payments to investors and creditors.

Accelerate’s shares are currently trading on the JSE at R1.70 a share, which means the market value of the 123 million shares is R210 million. If this is the total ‘pot’ to be paid pro rata to investors and creditors with claims of R6.3 billion, investors will only receive around 3.3% of their original HS investments.

This distribution may change significantly if the share price of Accelerate changes and/or the actual claims against Orthotouch and Zephan are adjusted. The exact details will only be included in the final business rescue plan.

Only two possible ‘third party’ candidates

The identity of the third party was not disclosed during the meeting, but Du Toit and Nic Georgiou’s lawyer, Mario Kyriacou, made it clear that it is not Accelerate.

However, a cursory glance at Accelerate’s shareholder register reveals that only two parties own more than 123 million shares and would be able to offer such an amount.

Michael and Nic Georgiou at the listing ceremony of the Accelerate Property Fund. Image: Supplied

They are Michael Georgiou, Nic Georgiou’s son and CEO of Accelerate, and Coronation Fund Managers. The most likely candidate to offer the shares is therefore Michael Georgiou, who owns 293 million shares, or 30% of the company.

Creditors’ committee

During the meeting, a creditors’ committee was appointed to represent all investors and creditors during the business rescue process. The elected committee members are Dr Gert Holtzhauzen, Don Dawson, JP Smit, Bethuel Kgobane and Helgard Hancke.

Hancke is a former member of the Highveld Syndication Action Group, which is in the process of instituting a class action against Georgiou and Orthotouch. He later jumped ship and is now marketing a similar Accelerate share offer to investors.

Several investors raised objections against Hancke’s appointment to the committee.

Du Toit then put his nomination to a vote but too few investors voted against his inclusion. Hancke’s appointment was therefore confirmed.

Independence

Several investors also questioned Du Toit’s independence as business rescue practitioner.

One investor claimed Du Toit and Klopper were “partners”, as they were joint business rescue practitioners in the business rescue process of the Platinum Group in 2015. Du Toit acknowledged that he worked with Klopper in the past, but strongly denied that they were partners and rejected that it influenced his independence.

“I became involved after I was approached by three parties, an attorney in Bloemfontein, a property company called National Real Estate and Klopper. I am totally independent. My independence is based on the fact that I have no interest with Nic Georgiou, Orthotouch or Zephan. I have no knowledge of the businesses and that makes me independent.”

Investigation into possible looting of assets

In response to a question of whether he will request a Section 417 investigation into the possible looting of assets by directors and other parties prior to the commencement of the business rescue process, Du Toit said a business rescue practitioner does not possess the same authority as a liquidator in requesting such investigations.

“What we can do is go to court and get a court order to get the authority to investigate such matters, but someone needs to foot the legal bill. The business rescue [process] is not going to foot the bill … If I start to spend millions on investigations it is not going to give you a [optimal] return.”

He invited anyone with proof of criminal conduct to present it to him.

Such an investigation may be necessary as the explicit provisions in the business rescue plan and the Section 155 Scheme of Arrangement that all properties be transferred to Orthotouch were not adhered to.

Not a single one of the 79 former HS properties was ever transferred to Orthotouch. Apart from the three remaining properties in HS 16 and HS 18, all properties were sold. This includes 42 properties valued at a total of R3.4 billion that were successfully syndicated to investors but never transferred to the HS companies. These properties were also sold to third parties.

Connie Myburgh, former director of Orthotouch and the current chairman of the Nova Property Group. Image: Supplied

Two individuals who have been integral in the management of Orthotouch and the HS companies were recently cited in a Section 417 report into the possible looting of assets prior to the liquidation of an unrelated company, Harrison & White. They are Klopper and corporate lawyer Connie Myburgh, also a former director of Orthotouch and the current chairman of the Nova Property Group, the rescue vehicle of the failed Sharemax scheme.

Klopper strongly denied the findings of the report. Myburgh has never responded to questions regarding the Section 417 report, although he has stated that Moneyweb did not have permission to publish the report.

Read: The dark underbelly of the business rescue industry

Read: ‘Guilt without trial” – Klopper

Confirmation of claims

Du Toit emphasised that all investors who have claims against Orthotouch need to submit them to his office. If claims are not submitted, they will not be settled if creditors accept the Accelerate offer.

Du Toit also said that the necessary information will be sent to investors within two weeks and that if investors have not received any communication by then, they should contact his office (info@dtbbusinessrescue.co.za).

SCA finds buyback agreements remain valid

In another development, a judgment released by the Supreme Court of Appeal on Friday will result in Georgiou facing claims from investors in HS 21 and HS 22 of more than R3 billion in his personal capacity.

The court dismissed Georgiou’s appeal against a previous High Court judgment which found he must honour the buyback agreement he signed with an HS 22 investor. Acting Judge Moroa Tsoka also confirmed that the buyback agreements were not affected when the HS companies were put into business rescue.

It is currently unclear how this judgment will affect the business rescue process of Orthotouch and Zephan.

 

Accelerate share price over the past 5 years

 

 

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The fairy funding ‘third party’ has “Michael” written all over it.

These companies should be liquidated so that a section 417 enquiry can take place followed by an action to keep the directors (incl Klopper who resigned) personally liable.

Accelerate Property Fund Shares are at an all time low as of: 05th Dec 2019

R1.29!!

Nic Georgiou (Orthotouch /Zephan) and Helgard Hancke (HSBF / HSIF) shame on you for selling these shares as a ‘concrete’ offer to HS Investors – a full and final settlement of their Original Capital Investment!!!

You have valued the shares at R7,50!!

The assets landed up in Accelerate illegally.

This is absolutely insane. So anybody can loot and then implement a BRP as easy as that???? Is the BRP the new protection plan for criminals??? The most important question that should be asked is FOR WHAT REASONS DID THE BRP’S NOT BE SUCCESFUL?? We all know the answer and the investors have the right to know why they are in this position. Thank God that Adv Bolt and Jaques Theron of the class action will be bold in their actions. It is shrewdness that allows entities to jump from one Business Rescue Plan to the next one WITHOUT any investigations

IT IS INSANITY…I totally agree with you Logic!!!

MR BUSINESS RESCUE PRACTITIONER – JACQUES DU TOIT, Your excuse regarding why you won’t go to court an institute an investigation is pathetic!! You have been informed of all ‘the peculiar’ shenanigans and yet you turn a blind eye???

Your ‘Concrete’ offer turns out to be a Terrible Joke!!

I will continue litigation as a member of the HSAG with Theron & Partners at the helm!

Nic Georgiou has presented more settlements than I can count on my hand … and NONE OF THEM HAVE EVER BEEN HONOURED.

SO UNPROFESSIONAL AND UNTRUSTWORTHY.

#GeorgiousWillFall

So Mr Hancke where are you now??? Convincing investors to take up Accelerate shares??? You should be ashamed of yourself!!!

Helgard Hancke and Don Dawson are obviously being paid a salary …
And now they unashamedly sit on the Creditors Committee.

How people can believe believe that those two have ‘investor’s Best Interests at heart” is beyond me??
They have led many to sign away their rights against their original Claims and none of those offers/settlements have come to fruition…

AND NOW THE BEST OFFER OF ALL IS UP FOR GRABS…AS LITlLE AS 3.3% OF YOUR ORIGINAL CAPITAL INVESTMENT!!

WAHOOOOOO….!!!!

I would have thought that to make an offer of this nature and consequences would have a condition that it is accompanied by full and proper disclosure of all relevant facts and cash flows from date of issuing the original prospectus. Anything less and to accept it would be entering into an agreement blindly. This is the least that the investors should be given. I should also include who earned money from all he prospectuses to date of all the related companies.

100% Reminds me of Stanlib buying dodgy new construction-relatedlistings leading up to 2010.

Andre Prakke, yes one would think there would be a proper disclosure of facts etc etc etc etc…
However, we are talking about the Georgiou’s here…
If people have not realised that an offer by these people has not been upheld in 9 years then they must sign their rights away for the FANTASTIC OFFER OF 3.3% OF THEIR ORIGINAL CAPITAL!

What a smelly business! That Coronation have any exposure to this crowd is a shocking indictment of their research team here.

Fortunately, like in the case off Steinhoff, nobody had too much exposure in this company. Because everybody was well diversified. Nobody was foolish enough to put their eggs in one basket. Yes?

The old adage stands.

A FOOL AND HIS MONEY ARE EASILY PARTED.

It’s all about greed and not need. if its to good top be true then dont touch it.

In corporate law, liquidations are allowed. The challenge is when one can pick up some kind of underlying currents. This is a well written and researched article. Part of me perceives some kind of scheme behind “the good Samaritan”. Maybe I am being paranoid.

It may well be the Chinese have the perfect solution with their firing squads for the greedy financial tricksters. But then, they don’t have our’ best constitution in the world’

Thank you Ryk for another well wwritten article. I feel so sorry for the poor people who have settled for the 50% and 55% through Helgard Hancke and Don Dawson they will now surely realise that they will only get 3.3% of their original investment? They should rather have joined the Class Action and not signed away their rights with those contacts!

This is once again, a confirmation that those responsible for the sell off of the properties must be sued in court!

Those who have not yet joined HSAG Class Action still have time to do so. Do it immediately!

Those of you who are not yet paid up to date with the HSAG Class Action, do so immediately!

All we can say is Helgard and Don should be ashamed of themselves —– Judas springs to mind. But we all know that the wheel does go round and it WILL go round —- watch this space

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