Nova suspends interest payments to debenture holders

Blames inability to raise external finance to fund upgrades and maintenance.
From left to right: Dirk Koekemoer, Rudi Badenhorst, Connie Myburgh and Dominique Haese.

The Nova Property Group has suspended interest payments to debenture holders due to the group’s inability to obtain bank funding to fund its property management operations at the various property developments. The interest payments were suspended from November 1.

Following recent Moneyweb reports, Moneyweb has been inundated with calls from debenture holders regarding the suspension of debenture payments. From the interaction with debenture holders, it seems as if all interest payments to qualifying debentures were suspended, which includes debentures related to the Rivonia and Silverwaters properties.

Moneyweb offered an opportunity to Nova CEO Dominique Haese to provide some clarity regarding the suspension of the interest payments. She did not offer any details regarding the suspension but said that “all relevant debenture holders have been fully informed in our normal communication process”.

She added that debenture holders can contact the Nova call center at 012 425 5000 or visit the website of Frontier Asset Management at www.frontieram.co.za

Haese previously suspended all communication with Moneyweb, as she is unhappy with our recent reports on various aspects of Nova’s operations, most notably the 87% of Nova shares the directors received for free and how the directors tried to keep this secret. (See the statement at the bottom of this article.)

In a letter dated November 3 that Nova sent to debenture holders, Haese says the decision to suspend interest payments was taken as the group could not secure external funding to upgrade and maintain underlying properties.

Haese wrote in the letter: “This deceleration in the flow of external funding and the rate at which upgrades, maintenance and the placement of tenants has to be done can currently not be synchronised and the Board had to once again take the difficult, but strategic, decision to cease current monthly return payments which are being paid to holders of certain classes of debentures, until the funding situation from external sources improves.”

This means that the Nova board will seemingly retain profits and cash earned from these properties to fund maintenance and upgrades at other properties.

External finance

Nova has on numerous occasions blamed negative media coverage, which includes reports from Moneyweb, as a major reason why banks are reluctant to extend loans to the group. Apparently, the banks are influenced by media articles and fear there is substantial “reputational risk” associated with doing business with the Nova group.

During a meeting between Moneyweb and the Nova board, when the board revealed its shareholder registers, Nova chairman Connie Myburgh even referred to a photo that was used alongside a Moneyweb article, which he claimed prompted a bank to withdraw from funding negotiations.

Ironically, this article and photo were about the Constitutional Court’s decision that denied the directors of Nova leave to appeal against an earlier Supreme Court of Appeal judgement. This ruling, which brought an end to a legal battle that lasted for more than three years, found that Nova could not refuse Moneyweb access to its shareholder registers.

Cash flow pressure

The suspension of interest payments is not really a surprise, as an analysis of Nova’s 2016 financial results (which ended in February 2016) shows that Nova has some cash-flow pressures.

The company’s operational activities saw a cash outflow of R27 million in the 2016 financial year. The board did manage to acquire external funding of nearly R54 million, which left the group with cash resources of R42 million at the end of February this year.

The Nova board also disclosed in the 2016 statements that the group managed to secure a loan of R31.5 million from Nedbank. Interestingly, the directors, in their personal capacity, provided limited surety on this loan.

If the board cannot secure more bank funding, the board may be forced to sell some of the properties to raise cash, as the group did between 2013 to 2015. These disposals raised cash of around R285 million.

Annual general meeting 

Nova held its annual general meeting on Wednesday in Pretoria. It was attended by around 20 of the 2 000 minority shareholders. Moneyweb requested permission from Nova chairman Connie Myburgh to attend the AGM, but he did not respond. A similar request from Carte Blanche was denied.

During the meeting, Myburgh approved all the resolutions, including a resolution on executive remuneration, with 100% of the vote. The four board members – which include Myburgh and Haese – own 91% of the voting rights in Nova via a nominee company and approved their own salaries. The remaining 9% of the voting rights reside with existing and former senior managers within the Nova group.

Read also: Staggering salaries of Sharemax rescue vehicle directors.

 

Response from Dominique Haese, CEO of Nova:

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb. We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

Yours faithfully,

Dominique Haese

CEO Nova Property Group

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wouldn’t have happened if you had listened to magnus and moi to invest off-shore

Take a bow sir. Your sheer brilliance supersedes us mere mortals.

I am here to serve!

Yeah! Greed and a f-u attitude to everyone but one’s own ego and grasping desire for more, more, more. Just shows you get really bad people in all walks of society and not only govt.

One of the sad facts of life is that we are so focused on what the politicians and govt officials are doing we overlook (or rationalise away) the evil that so many business people do.

Make a list of all the shady business deals and backroom cartel deals and over the last decade and it would (in sum) be as bad as the Zupta happenings. Imagine if these folk were our elected officials – we could be in even worse trouble than we are now.

White collar crime is as much a scourge as corrupt governments.

Myburg and his merry comrades remind me so much of Zuma and his gang of merry looters

Bully your way into power

Give assurances – get peoples confidence – get your hands on the chequebook

Start looting

Stuff the business principles

Keep on looting as much and as quick as possible because it will end soon.

Retire into obscurity (in this case I hope it is in jail) and the fact that you will lose your license and will never be trusted again is immaterial – you have taken enough from the poor who can least afford it.

Viva Connie and mates!!!

What is FSB doing??? Waiting for this to become another Saxum Insurance who failed two weeks ago —- nothing will be done??

Unless it’s the same letter, I see she still uses the meaningless expression “bona vide”.

Surely this is a case that the FSB should be digging into and making some serious statements around reckless and unethical management and maybe toe new PP should be getting to grips with

Questions: Why did they not use their inflated fat salaries instead of loans? Do they just borrow the money to pay their overloaded fat salaries? What have they effectively done to improve the position of the company and pensioners…nil?….No I’m not talking about their OWN positions…which is glaringly obvious.

Correct me but one thing seems certain Moneyweb refuse to waiver their ethics, refuse to tramp on their own educated professionalism and experience, refusing to watch the country go to rot. It is glaringly obvious that Moneyweb, like everyone with a clear vision, see a government crises born from poor education, poor experience, poor professionalism and apparent tolerance toward crime, fraud and corruption, which cause and brings about a further evil, which is an unknown and never seen before explosion in white color crime, such as seen here?

Once again, Moneyweb sensored my views, which were merely to comment abiut Mr Myburg reminding me about Mr Zuma

What are you scared of Ryk?

You should not start and report on aninvestigation of this nature without having guts.

Well done, withnthe investogation

Poor show for failure to publish fair comment

Sorry. Only saw the comment now. It was flagged for moderation.

Sure

Reading and finishing the article ending with:
CEO Nova Property Group
Looking for somebody to help you build wealth?
I nearly had a heart attack thinking I’d miss out and immediately wanted to join their directorship, before noticing my error and misread. Should have known this sort of acquired wealth is only for those who may think heaven is a 3rd world place? and one can only buy your way in with other peoples money? So heartbreaking isn’t it?

Much the same as the ANC councilors in a municipality like Parys. Take their pay first every month and do nothing. Koekemoer was a liquor salesman and met Willie Botha who owned liquor stores. Willie Botha pulled him in and made him property director. Now one can see what he is worth looking after properties and have no idea how to make money with properties that was paid for in cash. Here is the question: If a tenant paid R6000.00 for a shop 10 years ago, what should he pay today? Where is the money Dirk? O, sorry, you dont know, you are not qualified in property management.

End of comments.

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