On Digital Media (ODM), the company that owns pay-television brand StarSat (formerly TopTV), is a step closer to concluding its business rescue process after it won a high court battle last week against one of its minority shareholders. It has been in business rescue under the Companies Act since October 2012.
The high court on Friday rejected an application brought by one of its minority shareholders, Mergan Moodley, who had sought to stop the business rescue process, claiming, among other things, that he was unfairly disadvantaged by changes in ODM’s shareholding structure.
Judge PA Meyer has ordered Moodley to pay costs of several respondents named in the application, including ODM.
Moodley contended in his court application that the business rescue plan, which had been approved by other ODM shareholders as well as the company’s creditors on 30 April 2013, was illegal and flawed and that his rights as a shareholder had not been taken into account.
ODM says the high court judgment in its favour means it can now proceed with concluding the business rescue process.
“The business rescue practitioner [Peter van den Steen] has gone on record throughout the process in defending Mr Moodley’s interests and rights, however small his shareholding is and would become after dilution. The high court, with this verdict, has agreed with the practitioner’s approach,” the company says.
ODM alleges that Moodley attempted through the court application to “disrupt the proper implementation of the business rescue plan”, threatening 200 people’s jobs and money that could be paid to creditors.
It claims, too, that he sold his shareholder loan claim during the vote on the business rescue plan to MSG Afrika Media, a company which received a commitment of enterprise development funding to the tune of R500m from direct ODM rival MultiChoice in order to pursue an acquisition of the fledgling pay-TV operator. TechCentral could not reach Moodley on his mobile phone for comment.
In an interview with TechCentral in February, Van den Steen vowed that StarSat would emerge as a “serious competitor” to MultiChoice.
“We’re going to sort out the issues around content and the richness of the offering, and then we’re back on track again,” he said at the time.
Under ODM’s business rescue, China’s StarTimes — which already operates a dozen pay-TV networks across Africa — is acquiring a 20% stake in the business. That’s the maximum permissible under South Africa’s broadcasting laws.
However, StarTimes has a 65% economic interest in StarSat under a proposed shareholders’ agreement, meaning it will participate in 65% of any future profits.
New black economic empowerment shareholders — identified in the court papers only as 2012/200078/07 (South Africa) and Diduscan — will hold 65% of the restructured ODM’s equity, but are entitled to only 20% of future profits.
Under the new structure, ODM is essentially becoming two separate companies. One will house the traditional pay-TV business and the second will house functions that in the past had been outsourced. — © 2014 NewsCentral Media