Nova director stands by his ‘daylight robbery’ claim

Nova board says this is ‘at odds’ with his prior communication with the board.
Debenture holders will reconvene on Friday in Pretoria for another investor meeting, although a new Scheme of Arrangement document will not be available in time. Picture: Moneyweb

The board of Nova PropGrow has distanced itself from statements made by the financial director of the group at an investor meeting two weeks ago that the listing proposal put to former Sharemax investors was “daylight robbery”.

Read: Proposed Nova listing scheme may not be in the interest of debenture holders

Rudi Badenhorst spectacularly broke ranks during the meeting when he said he could not sit on the stage and seem to endorse the proposal. He said he and operations director Dirk Koekemoer (still a director but suspended as an employee) objected to the equity stake of 43% the seven founding shareholders would receive in the newly-listed company and proposed a reduced holding of between 10% and 15%.

Nova CEO Dominique Haese said in an answer to a Moneyweb question that the “statements by Mr. Badenhorst and allegedly by Mr. Koekemoer, are at odds with their prior communication with the Nova board. Both have, as recently as October 31 2017, confirmed and requested the allocation of their shares, in accordance with their respective pro rata proposed share quantums, of the proposed 43%, of the total quantum of shares proposed in Nova Holdings (Listco). 

There was a massive turnout by former Sharemax investors at the Nova debenture holders’ meeting to vote on a possible listing.

In addition, since that day and up to the date of the meeting of 10 November 2017, Mr. Badenhorst supported and contributed in his capacity as financial director, to the proposed listing process and the preparation of financial related documentation required for the Section 155 Circular dated 29 September 2017, on the 43% basis.”

(Read the full set of questions and responses from the Nova board here).

Badenhorst did not want to respond to this statement by Haese, but affirmed that he stood by his remarks made at the meeting where debenture holders were set to vote on the listing proposal. 

But Badenhorst threw the cat amongst the pigeons when he described the proposed scheme as “daylight robbery”, specifically citing the 43% equity stake the seven founding shareholders were set to receive as it would unduly dilute the investments of the 19 700 debenture holders. Koekemoer did not want to comment on the matter.

His actions highlight a rather dramatic disagreement and infighting within the four executive board members and the huge financial benefits they stand to make if the scheme is pushed through in its current form.

Nova response

The Nova board convened an emergency board meeting and issued a press statement and answers to several Moneyweb questions on Friday. (Read the full set of questions and answers here.)

In response to a question whether the scheme was fair and reasonable towards debenture holders, Haese responded: “The board, including Mr. Badenhorst, approved the Section 155 Circular, and Mr. Badenhorst signed the certificate in terms of Section 155(5) of the Companies Act, on September 29 2017, on the basis that the board viewed the proposed Scheme of Arrangement fair and reasonable.” 

Haese also said in relation to Badenhorst’s resignation: “Mr. Badenhorst was requested by the CEO to resign, based on certain issues which were discussed with him, inter alia, that he neglected to fulfill his duties as a financial director, while continuing to take his full remuneration as financial director. He acknowledged that the issues discussed with him were well founded and he resigned on August 17  2017 out of his own free will, which resignation, effective 30 November 2017, the board accepted and was formally minuted.” 

Amendments to the Scheme of Arrangement

Debenture holders will reconvene on Friday in Pretoria for another investor meeting. The Nova press release states that due to time constraints a new scheme document would not be available prior to the meeting, and that it would therefore only be an information session. Another meeting will be scheduled at which debenture holders would be required to vote.

The press release also reaffirmed that the listing of Nova PropGrow, the company that owns all the former Sharemax properties, on the JSE will become a condition of the scheme. This is a critical amendment to the original proposal as the entire scheme will now be hedged on the listing and would require Nova to produce a detailed prelisting statement.

Another amendment would see the High Court sanction the Scheme of Arrangement.

The Nova directors. From the left: Dirk Koekemoer, Rudi Badenhorst, Connie Myburgh and Dominique Haese.

Shareholders agreement

However, two main issues remain that were not addressed in detail in the press statement or in the answers the Nova board provided to Moneyweb. They relate to the shareholders’ agreement of the founding shareholders and whether they will indeed receive 43% of the newly listed company, and the other is whether an independent firm would be appointed to conduct a fair and reasonable assessment.

The press release states that these issues are “being considered and will be attended to”. It is this allocation of 43% that Badenhorst labeled as “daylight robbery” and not in the interest of debenture holders, as the 19 700 debenture holders were set to collectively receive only 34.5%.

The transparency of the shareholders’ agreement is critical as it sets out how the 95.7% equity stake the seven founding shareholders currently own in Nova PropGrow will be converted to shares in the newly listed company.

At the meeting on November 10, Nova chairman Connie Myburgh said the shareholders’ agreement couldn’t be disclosed due to “regulatory” reasons. Moneyweb sourced legal advice on the matter, which found that there could be no regulatory requirement to keep this confidential.

Haese confirmed this position in the answers she provided to Moneyweb questions: “The board prefers to accept the legal advice of its external, independent legal counsel and the board supports the statements made by Mr. Myburgh.”

Section 155 Scheme of Arrangement and the absence of a fair and reasonable statement

The second issue is whether the actual Scheme of Arrangement should be brought under Section 155 or 114 of the Companies Act. The current proposal is in terms of Section 155, but Moneyweb believes it should be brought under Section 114. The major difference is that under Section 155, it is not necessary to commission a fair and reasonable assessment, while it is compulsory under Section 114. The original proposal does not make provision for such an analysis.

In the Nova press statement, the board states that it remains of the view that Section 155 is the correct section for the scheme and has a specific independent legal opinion to support this.

However, even if the scheme is brought under Section 155, the board may be forced to commission an independent fair and reasonable assessment of the scheme to assist debenture holders in their decision to accept or reject the offer.

This is inevitable following the public criticism of the scheme by Badenhorst. Considering this, it is also unlikely that the JSE would allow the listing of the company or that the High Court would sanction such a scheme without a fair and reasonable statement.

Read the full set of questions put by Moneyweb and responses from Nova here.

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“The board prefers to accept the legal advice of its external, independent legal counsel and the board supports the statements made by Mr. Myburgh.”

Give me 5 lawyers and I give you six legal opinions.

Myburg knows where to get his advice – or rather, where to get someone to back-up his actions.

It is shocking to see these looters still roaming the streets and having expensive dinners and carry on as part of the rich whilst so many pensioners are suffering Mr van Niekerk you and your team are doing good work thank you

It is absolutely ridiculous to try and defend i) the current shareholding in the property portfolio held by Nova staff and directors under the current dispensation and also ii) the proposed shareholding in these properties under the proposed listing structure. Non of this gang has paid or will pay for this shareholding and thereby they are further diluting the already weak position of the rightful, just and equitable owners of this property portfolio (being the actual investors / debenture holders).

Dominique Haese, Dirk Koekemoer, Rudi Badenhorst, Mathew Osterlo, Corrie Van Rooyen and Nel Van Zyl know this clearly and should not continue to be manipulated by the greedy and wrongful actions of the gang leader.

For far to long has this injustice to elderly investors continued. The operational costs of Nova, the exurbanite salaries, bonuses and fees that this crowd allows to themselves are taken from the rental income of the operating properties at rates inexcusably and much higher than the standard property management fees applicable in the market place, thereby enriching themselves at the cost of the thousands of elderly investors who no longer receive a return on their investment money.

It is time to make a stand and to save your last bit of integrity that may be left, like Rudi Badenhorst has enventually done.

The day of reckoning is on its way, have no doubt about that.

Frans.

Dis beter om op mnr Badenhorst se huidige optrede te fokus, wat daarop dui dat êrens in hierdie Sharemax/Nova-gemors dalk nog ‘n gewete in die direksie bestaan. Dis nie duidelik hoekom hy nou eers so opstaan nie, maar aan die ander kant weet mens ook nie hoe dit gaan om tussen mense soos mnr C Myburgh en me D Haese te moet probeer oorleef nie: om op te staan teen mense wat in staat is tot die soort misleiding-met-fynskrif en om aan te hou groot geld te vat waar oumense en naïewes se geld in gedrang is, moet jy jou rug maar dophou.

Die gebeure in Zimbabwe gee darem hoop dat selfs waar dit lyk of jy iemand nooit uit die stoel gelig gaan kry nie, daar blykbaar ‘n perk aan openbare mening se geduld is. Dit word dalk tyd vir die beleggers om ‘n keer net ‘n vergadering oor te neem en vir die Nova-direksie te verduidelik dat hulle tyd verby is – ongeag al die beskikbare trieks in die maatskappywet – en daar ander direkteure aangestel gaan word. Die feit dat dit nog nie eens naastenby gebeur het nie, wys ongelukkig dat geldmense en regsmense maar ‘n kliek is waar die een kundige nie teen die ander opstaan nie: want dit is die kernprobleem – waar om kundige direkteure te kry wat die gemors regtig eerlik gaan opruim. Bygesê, Disselboom erken ook hy sal wil ook nie probeer nie, want dinge is al so ver dat beleggers waarskynlik baie gaan verloor, ongeag watter eerlike en opregte oplossing ook al geïmplementeer word; maar hoe lank gaan die status quo net aansukkel? En hoe lank moet Moneyweb omtrent ‘n alleenstryd voer? Iets is nie pluis nie, as gekyk word hoe oppervlakkig en sporadies die saak in die Afrikaanse media aandag kry. Die skaal verskil wel, maar daar is nie soveel verskil in moraliteit tussen Gupta-staatskaping en Myburg/Haese-Sharemax-kaping nie.

Daar is basies net drie moontlike opsies vir die beleggers in die ex-Sharemax geboue en eiendomme om beheer te kry oor hul eiendom portefeulje en die “day light robbery” tot ‘n einde te bring, naamlik

a) Beleggers moet deur massa-aksie daarop aandring om hul eie verteenwoordigers aan te stel wat die skuldbriefhouers (debenture holders) eerbaar sal verteenwoordig deur bv. ‘n ervare en dalk afgetrede eiendom portefeulje bestuurder, advokaat of prokureur en ‘n ouditeur aan te wys as hul verteenwoordigers.

b) Deur wyse van ‘n klas-aksie, wat deur die meerderheid van beleggers gesteun word,’n klagte in te die dien by a) die Reserwe Bank en b) by die departement van Handel en Nywerheid betreffende die slinkse en verdoeselde wyse waarop die direkteure en personeel van Nova hul aandeelhouding bekom het tydens die artikel 311 herskikkings aansoek en die feit dat die Reserwe Bank se oorsig span dit nie opgetel het nie en die diefstal plan nie teengestaan het nie.

c) Deur die “public protector” te nader om die bedrogspul te ondersoek en om deur ‘n hofbevel die aandeelhouding en alle oorbodige gelde wat die Nova spul onregmatig bekom het ter syde te laat stel en terug te eis.

Die beleggers kan daarna enige onafhanklike, bekwame en ervare eiendom bestuursgroep aanstel om die eiendomme namens die beleggers te bestuur, te ontwikkel of te verkoop soos die beste geleenthede ontstaan. Sodanige aanstelling kan op ‘n tender basis evalueer word. Daar is baie sulke onafhanklike eiendom-bestuur groepe. Die standaard fooi in die marke vir die diens wissel tussen 3 tot 3,75% uitgedruk as ‘n persentasie van die bruto huurinkomste uit die eiendom portefeulje. Met ander woorde die beleggers kan weer 96,5% van die gebou inkomstes ontvang as beleggings inkomste.

As die beleggers hul eie vergadering beroep en besluit op hul plan van aksie kan hulle die vergrype stop sit, beheer oorneem en hul beleggings beskerm. As die beleggers hul egter verlaat op die Nova spul as hul reddingsboei sal die waarde van hul beleggings uitgeroei word na niks.

Dit is tyd vir die beleggers om daadwerklik saam te staan en daadwerklik op te tree. Dit kan gedoen word. Hoe langer hulle wag en hoop, hoe vinniger word die waarde van beleggings opgevreet en deur vergrype nietig gemaak.

Beide my ouers is oorlede terwyl hulle vir die geld gewag het. My ma se grootste vrees/hartseer was dat sy nie iets vir haar kinders kon los nie, sy is oorlede sonder om te weet of ek en my sissie ooit die geld sou sien en nou gaan ons deur dieselfde hel as waardeer sy was. My pa het gesê as hy die Sharemax geld kry gaan hy vir my broer in NZ kuier, hy is oorlede sonder dat hy ooit vir my broer gaan kuier het. Hulle het hulle huis verkoop en al die geld in Sharemax belê en is oorlede sonder om `n sent daarvan te sien. Nou moet ons in die vergaderings sit en hoor hoe skatryk is die klomp skelms, ons harte is gebreek, maar wat gee hulle om, dis mos nie mense se lewens nie dis mos net geld, hulle het my ouers se lewens verpletter!!

I hope Mr Myburg and his cronies read this and drop their plans to loot even further > > > > > > but this will never happen > they are poised to make the biggest killing of their pitiful lives and think they will live happy ever after.

This Nova gang get away with their misbehavior only because the investors (debenture holders and shareholders) don’t organise themselves and because they haven’t form a class action group as yet.

The investors should stop hoping and stop wishing for a resolve and should take this gang on in every possible way through means of appointing their own representatives to the debenture trust, appointing their own independent director to the board of the property holding entity, lodging complaints with the CIPC, Department of Trade and Industry, the Public Protector, the FSB, SAPOA, the attorneys council, the auditors council, the Reserve Bank, the office for serious economic crimes, etc as often as is necessary.

If the investors don’t start immediately to act decisively, this gang will continue with their crooked ways and they will bankrupt all these properties or steal it from the investors.

these people are kept “alive” by a corrupt amoral system….they are protected by this system…they thrive on it. As long as this system exists both black or white will steal other peoples rights.

End of comments.

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