Two disgruntled ODM shareholders have taken the company and its business rescue practitioner, Peter van den Steen, to the high court in an effort to stop what they call the “premature” implementation of a business rescue plan agreed to on 30 April 2013.
The two parties, First National Media Investment Holdings (FNMIH) and Mergan Moodley, who together hold 21,1% of ODM’s equity, have brought the application on an urgent basis. They claim they were excluded from a new shareholders’ agreement, required in terms of the business rescue plan for ODM.
In papers filed in Johannesburg on Friday, they have asked high court to stop Van den Steen and TopTV from “taking any steps” to implement the business recovery plan in a way that has irreversible consequences pending the fulfilment or waiver of the suspensive conditions set out therein.
The application is supported by an affidavit by former TopTV CEO Vino Govender, who is also chairman and CEO of FNMIH.
FNMIH holds 20,4% of ODM, while Moodley owns a further 0,7%.
According to Govender’s affidavit, the two shareholders want the high court to interdict Van den Steen from “unlawfully” and “prematurely” implementing the business rescue plan in a way that is not reversible while it remains subject to “suspensive conditions”. Doing so, they say, will “cause harm to the company, its creditors and employees”.
The latest drama comes just six months after the shareholders and creditors of ODM approved the business rescue plan that involved an offer by China’s StarTimes to purchase a direct 20% stake. In return for its investment in — or, rather, rescue of — the business, StarTimes will receive an effective 65% economic stake in the company, meaning it will participate in 65% of any profits reported.
Existing shareholders (exclusive European satellite operator SES, which is disinvesting) will participate in 15% of ODM’s profits, while a proposed new black economic empowerment (BEE) investor will participate in 20% of the profits and 65% of the shareholding.
Govender tells TechCentral that neither FNMIH nor Moodley has had “sight or comfort” from Van den Steen that the proposed investment by StarTimes and the unnamed BEE partner — he says this amounts to R5,3bn — has been “secured and verified”.
Although the business rescue plan leaves the restructuring of the shareholding in ODM to shareholders and StarTimes, the plan is conditional on such agreement being reached, Govender says in his affidavit. However, FNMIH and Moodley have not been party to any agreement between the other shareholders and have allegedly been excluded from negotiations in this regard.
He says it is “clear” that for the suspensive conditions of the rescue plan to be fulfilled, ODM’s existing shareholders (excluding SES) have to enter a shareholders’ agreement with StarTimes and the new BEE shareholder and that Van den Steen is “duty bound” to ensure that shareholders reflected in the business rescue plan convene a meeting to negotiate a shareholders’ agreement.
If a shareholders’ agreement is not reached or the suspensive conditions are not waived by StarTimes, Van den Steen must convene a meeting of all affected parties to devise a revised rescue plan or place the business into liquidation.
It later transpired that a shareholders’ agreement had in fact been signed on 1 August, Govender says, allegedly without the knowledge of Moodley and other non-participating shareholders. A shareholders’ agreement was also signed for a new company that would provide broadcasting transmission services to ODM.
Govender says in his affidavit that FNMIH has also been excluded from the process. He says both he and Moodley wrote to Van den Steen requesting copies of the agreements. These were not supplied as they were “confidential” and could not be disclosed to non-signatories.
Govender also accuses Van den Steen of “prejudging” a legal dispute between FNMIH and the state-owned Industrial Development Corp (IDC), the outcome of which could mean that FNMIH in future may no longer be a shareholder in ODM. Until there is a final order in the dispute between FNMIH and the IDC, Van den Steen is “obliged to recognise” the company as an ODM shareholder and to “give effect to its rights to be a party to the shareholders’ agreements”.
Van den Steen is accused of changing his tune on 11 October, when, through his attorney, he told FNMIH that ODM would “henceforth” include the company as a shareholder under the business rescue plan. But Govender warns that Van den Steen has continued with what he calls “his premature and unlawful implementation of the business rescue plan” and has failed to deal with urgent issues raised in correspondence sent to him.
Van den Steen says in a letter published on ODM’s website that both he and the company will file notice of intention to oppose the application brought by Moodley and FNMIH “shortly”. — (c) 2013 NewsCentral Media