Nova ‘will definitely not be liquidated’
A liquidation scenario was outlined only to meet Companies Act requirement, says Nova MD Dominique Haese
As 20,000 creditors consider whether to vote in favour of converting their debenture claims against Nova Property Group into shares in an as yet unlisted entity, chairman Connie Myburgh says there are no circumstances in which the group will be liquidated.
"There is simply no liquidation scenario," Myburgh said this week ahead of a Friday meeting at which debenture holders — investors in failed property scheme Sharemax — will vote on a proposal to swap their debentures for shares in a new company holding Nova properties. This would capitalise their claims of R1.68bn against Nova.
The plan is to list the new property company on the JSE, providing debenture holders with tradeable shares.
A liquidation scenario had been sketched in a circular issued to debenture holders only because this was required by the Companies Act, said Nova MD Dominique Haese.
Whether this assuages concerned creditors, many of whom are elderly and sank nearly R5bn into Sharemax, will be revealed on Friday.
Nova, formed in 2012 to take on the property assets of Sharemax, had already received hundreds of votes in favour of a listing, said Myburgh.
Debenture holders are understandably desperate for liquidity. Interest payments have long since dried up, even as Nova’s directors continue to extract healthy salaries, bagging R13.9m for the year to February — nearly R2m each.
The group owes Myburgh an additional R9.5m for legal and consulting services, said Haese.
Further, in terms of the 2012 arrangement, the seven directors received nearly 97% of the company for free, since the majority of then Sharemax investors elected to take up debentures rather than shares in Nova. This stake translates into a 43.21% share in the listed entity, with a notional value of R1.1bn.
Myburgh and Haese say if not for their hard work debenture holders would be worse off.
Debenture holders will receive 34.45% in the listed entity — for many a dilution on the rand value of their debentures.
Even if a JSE listing did not immediately go ahead, debentures would be converted into shares and traded directly via a Computershare platform, Haese said. "We are in discussions with the JSE and will update the market in due course."
A R400m equity injection from a mystery investor who would, in turn, receive 15.43% in the listed entity was still under due diligence, said Haese.
If debenture holders voted against the proposal, the scheme would run its course for another five years, repaying investors their historical capital, she said.