Tensions were high at the Orthotouch and Pickvest investment meeting, hosted by Highveld Syndication in Pretoria on Wednesday. Approximately 1 500 of over 18 000 investors in the Highveld Syndication schemes had to vote on the proposed scheme of arrangement to restructure the group.
This proposed scheme of arrangement comes after Orthotouch, which in terms of the business rescue process owns the syndicated properties, failed to meet its interest-payment obligations to investors.
Many investors were visibly agitated and tempers flared when it became apparent that neither business rescue practitioner Hans Klopper, nor any representative from Orthotouch were in attendance.
Despite the nervous start, the meeting lasted for three hours.
The meeting was chaired by Derek Cohen, who said he was totally independent and not related to any of the parties involved in the proposed scheme of arrangement.
The main speaker was ‘property professional’ Michael Kyriakides who had the responsibility to sketch the current financial position of the syndications and Orthotouch and to explain the various options available to investors in the proposed scheme.
Kyriakides also stated that he was independent and that he was not a representative of Orthotouch. The proposed scheme of arrangement document does however highlight that he has close ties with Nic Georgiou and was previously involved in the management many of Georgiou’s property developments.
During his presentation Kyriakides said the current structure was not viable as rental income on the properties is insufficient for interest payments to investors.
He said Orthotouch and Georgiou have subsidised interest payments of nearly R800 million.
He added that the proposed new scheme is viable as the current rental income is sufficient to pay the reduced monthly interest obligations to investors. He is also earmarked to be the CEO of the new listed entity as proposed by the scheme of arrangement.
Kyriakides again blamed ‘detractors’ for the current financial position of the scheme and said these individuals actively influenced several banks not to provide the R200 million in funding that Orthotouch required to upgrade and maintain the properties.
He said the detractors influenced banks and that the banks apparently saw ‘reputational risk’ in providing loans to Orthotouch.
Kyriakides did not name these detractors, despite several direct requests to do so. One of his responses to such a question was: “You need to ask the authors of the proposed scheme of arrangement.”
It was evident that many investors were skeptical about Kyriakides’s message, while others openly questioned his facts.
Kyriakides also did not answer questions relating to why investors should lose a significant portion of their rights if they support one of the proposed scheme options. He also did not answer a question as to why financial statements were not available.
In a second presentation, consultant Danie van Huysteen detailed the proposed option to list a range of properties on the JSE, via a new real estate investment trust (REIT). He focused on the good returns the sector achieved over the past decade.
It was evident from several investors’ reactions and questions, that they found this option of listing a REIT informative. One investor asked why this information was not included in the official documentation.
Motion to postpone the voting
During the meeting several investors proposed a motion to postpone the voting on the scheme of arrangement. The investors stated that new information was tabled at the meeting and that they would want to discuss this with their financial advisors. Other investors stated that they never received the official documents due to the strike at the Post Office.
Cohen responded that it was normal practice for voting to take place prior to a meeting and he did not put this motion to a vote.
Following the official presentations, Herman Lombaard, who is actively involved in the legal process to institute a class action against Pickvest, Orthotouch, Georgiou and other companies and individuals, took to the stage.
He delivered an emotional plea to shareholders to look at the bigger picture and to evaluate why the investors are in their current predicament. He said investors should look at the events that preceded the proposed scheme of arrangements and not merely at the “snapshot” of the current situation as was presented by Kyriakides.
He said under load applause: “In my opinion Pickvest is currently nothing else than Nic Georgiou taking control of the company”.
Watch Lombaard speak here:
At one stage a group of security guards surrounded Lombaard on the stage, to which Lombaard objected. Cohen then asked for the guards to move back.
At least two investors walked to the stage during the meeting and tore up documents, supposedly their proxy documents on which they had to indicate their vote.
After Cohen closed the meeting, at least ten security guards formed a line between the officials and the investors, who approached them with additional questions.
It is not clear when the results of the voting will be made public.
When approached for comment, Hans Klopper did not answer his mobile phone.