Eric Wood. Picture: SUPPLIED
Eric Wood. Picture: SUPPLIED

"It's a hijack." That is how Regiments Capital executive chairman Litha Nyhonyha and executive director Niven Pillay this week summed up an attempt by the Guptas to buy a 51% stake in their company.

A financial advisory firm founded in 2004, Regiments advises state-owned enterprises and municipalities - an established network into which the Guptas wanted entry.

SOEs such as Transnet and Eskom spend millions of rand on advisory firms - which is often a tightly contested space.

An offer to make Pillay a "dollar billionaire" was dangled, as the Guptas upped the stakes in their bid for Regiments.

Pillay recalled walking into a room at Saxonwold with a big lounge decorated in an Indian style and there, Tony Gupta showered praises on him.

"We sat down and then they offered to make me a dollar billionaire. All I had to do is sell them the business and exit Litha, because in their mind Litha was never going along for this ride with them, but I must stay on as the CEO, working with Mr Eric," Pillay said.

In June 2014, eight draft agreements of sale, seen by Business Times, were compiled to buy a 50% stake in Regiments for R200-million - without the knowledge of either Nyhonyha or Pillay. The offer was later increased to a 51% stake, during a verbal discussion at Saxonwold.

Regiments, however, refused to sell to the family. This has come at a heavy cost, with lost business so far estimated at R40-million as SOEs "shut the door" on Regiments, Nyhonyha and Pillay said.

We report elsewhere how former director Eric Wood, while in the process of leaving Regiments to join Trillian, began machinations that resulted in Regiments being elbowed out of a lucrative supplier-development relationship at Transnet and Eskom, with global financial advisory firm McKinsey & Company.

Through Wood, the Guptas intended to make inroads into Regiments and buy up half of the business through Elgasolve, a company linked to the family.

Wood, referred to as "Mr Eric", was their inside man at Regiments and supplied details of its net asset value, which included its cash position, debtors and the shares it held in Capitec and MTN.

Wood this week said any "information, financial or otherwise" provided took place with "full knowledge and consent" of the three partners.

Leaked e-mails between the brothers and their associates also show they were given confidential information at Transnet on its dealings with Regiments when former Transnet board member Iqbal Sharma shared its term sheet with the Guptas.

The purchase of Regiments had been the subject of back and forth e-mail correspondence between Pieter van der Merwe, the Guptas' legal representative; Tony Gupta; Tegeta CEO Ravindra Nath; Trillian owner Salim Essa; and Oakbay employees Elana van Wyk and Vidya Mudaliar.

On June 11 2014, Van der Merwe submitted a "final copy" of the deal to the team and noted everyone was "happy".

We now see what we feared then. They closed us out. 
Litha Nyhonyha, Regiments executive chairman

"Now we are finding out these things, that this company was actually being sold right under our noses in 2014 when we were preparing for our 10th anniversary. We were all in high spirits; it was a huge landmark that we were marking, whereas this guy [Wood] was busy selling a piece of the business," Nyhonyha said this week.

The pair are now locked in a legal battle with Wood, a 32% shareholder in the company; they want the court to declare him a delinquent director. Wood has a similar application against his former partners.

Contacted for comment on Friday, Wood said it was a "ridiculous notion" that his former partners at Regiments would allege he had tried to sell the business behind their backs.

"No attempts were made to sell the shares without reference to my partners and mindful that any such offer would have required the consent of all three of us," he said.

The plot to buy Regiments, though well on track by mid-2014, only came to light in April 2015 - at the meeting between Pillay and Tony Gupta in Saxonwold.

At the meeting, Pillay was asked to stay on as CEO of Regiments - an offer he took to mean that he would be the face of the business, while the real power would lie elsewhere. Pillay said he found it "strange" when Wood called him on a Saturday morning in April 2015 and asked to meet him at the office as he wanted to take him "somewhere".

"He [Wood] said I must leave my car there [at the office] and then I must jump into his car, but I was too nervous to do that and I said: 'I am not going to do that, I will follow you,'" Pillay said.

The mysterious drive led to Saxonwold and Pillay recalls driving up to "big gates" at the Gupta residence. Wood confirmed that an invite had been extended together to Pillay "who consented to join him" at the Saxonwold house.

The Gupta family, Wood said, had already been known to his partners when the corporate-finance division of Regiments was asked to do some advisory work for them in structuring the potential acquisition of the Independent Newspaper Group.

But with little scope for agreement and the third partner - Nyhonyha - absent, the proposed purchase by the Guptas was to come up for discussion at a routine Monday business review meeting among the three Regiments directors.

Nyhonyha and Pillay rejected the Guptas' proposal.

But wary of being seen as crossing swords with the powerful family, Nyhonyha and Pillay asked Wood to water down their refusal and make the excuse that the timing was not opportune and Regiments was restructuring. It backfired: Nyhonyha and Pillay learnt that saying "no" to the Gupta family comes at a price.

"We now see what we feared then. Because of the actions we had taken, they closed us out of Transnet," said Nyhonyha.


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