Outraged creditors of Sharemax successor Nova Property Group, who at a heated meeting on Friday accused the group’s directors of enriching themselves, look set to force sweeping changes to the terms of a proposal to list Nova’s R2.25bn property portfolio on the JSE.
Nova took on Sharemax’s property assets in 2012, after the Reserve Bank shut it for unlawfully taking deposits. By that time, about 20,000 people, most of whom would become debenture holders in Nova, had invested close to R5bn into Sharemax properties.
Now, these debenture holders, mostly Afrikaans pensioners, must vote on a proposal to convert their debentures into shares in a new company holding Nova’s property assets, which is to list on the JSE.
The conversion would nullify their claims against Nova, but it could potentially give them more liquid, valuable instruments. In terms of the proposal, 19,700 debenture holders will get a 34.45% interest in the listed entity, with Nova’s seven directors claiming 43.21% — a share they will get for free due to the way they set up Nova in 2012.
These same directors have earned handsome salaries since 2012, collectively bagging R13.9m for the year to February.
"What you are earning at the moment is an absolute disgrace," one debenture holder told directors Dominique Haese and Connie Myburgh. "There are people here who don’t have food on the table. You have hijacked the company to enrich yourselves," he said to loud applause.
Irate debenture holders questioned the fairness of the proposal. Their case was strengthened after Nova finance director Rudi Badenhorst said he had argued against the directors receiving such a large share. But the Nova board had dismissed this, he said. Haese said the board would consider "everything that came out of the meeting", including Badenhorst’s "surprise" comments.
Meanwhile, Myburgh conceded that the proposed scheme should be conditional on a JSE listing. The plan had been to issue shares that could be traded via Computershare, before ultimately listing the company. But this could trap debenture holders in an unlisted company, which might never receive a nod from the JSE. That Myburgh so quickly changed tack, signals that the directors may also agree to dilute their stake.
Voting was postponed to November 24. Debenture holders who had submitted proxies ahead of Friday’s meeting would be allowed to change their vote.