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Activist applies for interdict to stop proposed Nova listing

‘It is an attempt by directors to conceal their failure to repay debenture holders’ – Pienaar.
If the Nova listing were to take place investors' debentures would be converted to shares, which would be tradable on the JSE. Picture: Moneyweb

The activist who is challenging the legality of the Reserve Bank’s determination that the former Sharemax investment scheme contravened the Banks Act, has applied for an urgent interdict to stop the proposed listing of the Nova Property Group.

This follows the announcement by Nova that it wants to list the remaining properties within the group before the end of the year. If the listing takes place, this would see investors’ debentures converted to shares, which would be tradable on the JSE. The listing is dependent on the 31 000 debenture holders approving a Section 155 Scheme of Arrangement during a special meeting in November.

It is this approval process activist Deon Pienaar wants to stop. He is a former financial advisor who earlier this year filed an application in the High Court in Pretoria to review the legality of the Reserve Bank’s original 2010 directive that Sharemax contravened the Banks Act. This directive resulted in the collapse of the Sharemax investment scheme, and led to the sanctioning of the Section 311 Scheme of Arrangement that brought Nova to life.

Pienaar also wants the original Section 311 Scheme of Arrangement set aside. This case will be heard in January next year.

Default and Nova name change

In court papers Pienaar questions the Nova directors’ motives for proposing the listing, stating that it is merely an effort to “conceal the fact that they have defaulted on their Section 311 Scheme of Arrangement”.

This refers to Nova’s inability to generate income from the remaining Sharemax properties in its portfolio to honour capital repayments to debenture holders. Interest payments were also suspended last year.

Pienaar also takes issue with structural changes within the Nova group. These saw the name of the original Nova Property Group Holdings (the company brought about by the Section 311 Scheme of Arrangement) changed to Nova PropGrow Group Holdings, and the registration of a new company with exactly the same name as the original company with new directors.

He says the registration of the new company was an effort by the directors to circumvent the relief he sought in his review application. “This will indemnify themselves from their unlawful actions conducted after the Schemes of Arrangement and ‘distance’ themselves from the historical Sharemax companies.”

Nova did not respond to Moneyweb questions (see statement below). The directors also haven’t had the opportunity to respond to Pienaar’s application for the urgent interdict. The company did however respond to Pienaar’s enquiries prior to his application and said that while the company he cited as a respondent had changed its name, it retained its original registration number. Hence there was no confusion as to the identity of the company cited in the original application.

Proposed listing not in the interest of debenture holders

Pienaar also stated in his affidavit that the listing is not in the interest of debenture holders. “lt is not in the interest of the thousands of investors to be ‘distanced’ from the original Sharemax ring-fenced companies in which they chose to have been shareholders. They are now forced to become ‘watered-down shareholders in a portfolio’ and if they refuse they are threatened with an alternative liquidation scenario. They are hostages to proceedings they have no alternative to unless the truth is disclosed of how they were misled to give up their property rights….”

Nova suspended all communication with Moneyweb last year. Here is the final response received 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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COMMENTS   3

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The main issue at stake is not debentures (with a promise of payment) being converted to shares (with no such promise). Ordinarily this would be a travesty but is a mere sideshow. What should have Nova investors frothing is the fact that the directors drove this vehicle onto the rocks and then four individuals managed to pick up 87% of the residual value for absolutely no outlay on their part leaving thousands of investors with the 13% crumbs.

Sharemax se eiendom-beleggers behoort die regs-aksie wat daarop gemik is om Nova te stuit om die eiendomme op die beurs te lys, ten sterkste te ondersteun.

Die groot skade wat die Sharemax beleggers aangedoen is, kan as volg opgesom word:
a) Die seksie 311 reelingskema soos deur Nova daargestel was nie in die belang van die beleggers nie. Dit het meeste van die beleggers ontneem van hul vorige beherende aandele belange en dus hul beherende eienaarskap en stemregte ten aansien van die eiendomme en ten aansien van besluite oor die beheer en bestuur van die eiendomme en rakende magtiging om ‘n gebou te verkoop al dan nie.
b) Hierdie gevestigde beheerregte van die beleggers is op ‘n slinkse en agterbakse wyse deur die direkteure en aandeelhouers van Nova gekaap sonder om dit teen waarde te koop van die beleggers en is vir jare verdoesel en nie openbaar nie. Selfs die hof het nie die slinkse wip van die direksie en aandeelhouers van Nova besef nie.
b) Die S.A. Reserwe Bank se oorsig-rol het gefaal in die plig en verantwoordelikheid daarvan. Die Reserwe Bank en hul aangestelde oorsig beamptes moes die Nova seksie 311 reelingskema behoorlik geananliseer het en moes dit ten sterkste teengestaan het. Duisende beleggers is hierdeur benadeel en tot verdere skade verdoem.
c) Nova faal om die verpligtinge van die leningskuld instrumente (debentures) na te kom deur die rente inkomstes aan beleggers eers te verminder en later te staak. Met die aksie, le Nova beslag op die beleggers se inkomstes uit die geboue om daarmee (i) die buitensporige en absurde salarisse en bonusse van die Nova direkteure te befonds en (ii) word kapitaal opgebou om die leningskuld instrumente van beleggers in sekere geboue af te los tot die bate voordeel van Nova se slinkse direkteure en aandeelhouers. Beleggers word dus inderwaarheid uit hul eie inkomstes afgelos en ontslae geraak van – weereens sonder dat Nova betaal vir die bate belange.
d) In ‘n verdere en uiterste poging om die bedrieglike aksie tot hede te versteek, volle uitvoerende beheer van die eiendomme te bekom en om die beleggers se belange nog verder te verwater en tot niet te maak, poog Nova nou om die eiendomme op ‘n aandele beurs te lys.

Net as die Sharemax beleggers saamstaan en self besluit dat die slinkse en bedrieglike werkswyse met betrekking tot hul geboue belange nou stop gesit word, sal Nova gestuit kan word. Die beleggers kan selfs die slinkse Nova bende afdank as die eiendombestuurders van die geboue en kan dan’n ander behoorlike eiendom bestuurgroep van hul eie keuse aanstel om sinvol en eerbaar na hul bate belange om te sien en waarde te herstel.

Dead right… non of the arrangements to date have benefited debenture holders.
Smokescreen to dilute the failed syndications into a pool.
Original syndications where each presented on their own merit and investors shared on that specific risk.
Sharemax, the name, was never a product. Syndication was the product and each syndication had it’s own prospectus. Sharemax was merely the promoter
The obfuscation created by Sharemax and/or the marketers as a singular product is wrong and the status quo as it was should be restored. ie each syndication, with it’s own inherent risk and income attached.
The problem arose when the Villa, Zambezi and a few other syndications ran into trouble and there was a desperate attempt to access the “wealth” in the other syndicated buildings. The dirty tricks then started to the extent that even the directors now have a majority share at the expense of the original investors.
One should also look into the affairs of the original Sharemax founders and it would not be at all surprising to see who is actually pulling all the strings here.

End of comments.

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