Lekhetho Ntsukunyane
MKM Star Lion Group directors Simon Thebe-ea-Khale and Mothofela Ramakatsa signed an agreement with Chavonnes Cooper and Daniel Roberts from law-firm Webber Newdigate two months ago, which could have saved their business empire from total collapse, the Sunday Express has learnt.
The agreement, a copy of which the Sunday Express has managed to obtain, was signed by the different parties between 23-29 September 2014, and would have stopped the liquidation of the firm had Mr Thebe-ea-Khale and Mr Ramakatsa gone along with the deal.
However, the two businessmen would have still lost control of the company even if they had fulfilled the agreement but spared “any criminal complaints or civil claims against either of them.”
But after failing to honour the deal, MKM—which was shut down in November 2007 by the Central Bank of Lesotho (CBL) after it emerged the company was operating banking and insurance businesses in violation of the Financial Institution Act 1999 and Insurance Act 1976—goes under the hammer tomorrow at Lesotho Sun Hotel.
A CBL-commissioned investigation conducted by South African firm, PricewaterhouseCoopers, also revealed that of the M400 million invested by depositors, MKM— comprising MKM Marketing Ltd, Star Lion Group Ltd, Star Lion Insurance Ltd and Star Lion Gold Coin Investment (Pty) Ltd—could only account for M100 million in assets that included buildings and vehicles.
The CBL then applied for MKM’s liquidation in the High Court, citing the company was insolvent because its liabilities were much more than its assets. The application was granted on 18 May 2011, and upheld on 21 October 2011 by the Court of Appeal.
However, in an effort to avert the liquidation, the two parties signed an agreement titled Settlement of Property and Other Disputes, which reads in part: “This agreement records an agreed plan to put an end to the liquidation and to enable a NEW PROPCO to legally acquire certain Estate Properties with the aim of carrying on with the funeral business and providing a share investment for all investors.
“The aim is to provide for the final winding-up of the estate and to facilitate an offer of compromise to be considered and finalised in terms of the Companies Act and to ensure payment of a dividend to trade creditors, payment of estate service-providers, litigation costs, and administration costs in the estate, exclusive of investors who shall be dealt with in terms of the offer of compromise.”
Mr Simon Thebe-ea-Khale and Mr Mothofela Ramakatsa then agreed to “irrevocably” appoint Mr Johannes Petrus Jordaan of Bloemfontein “and another person to be appointed by them in writing within 14 days of signing the agreement as their agents with authority to: Acquire or register a new company – NEW PROPCO – with the sole director being Johannes Petrus Jordaan; appoint a Bloemfontein attorney for NEW PROPCO; do all things necessary to implement this agreement and sign all documents for NEW PROPCO including further agreements with the liquidators.”
The agreement further directed that there had to be a REQUIRED AMOUNT “for the liquidators to pay all costs of administration in the estate and a dividend to the trade creditors (not investors), namely M120 million.”
The amount, the agreement stipulated, would be raised as follows: “M50 million to be provided by NEW PROPCO; sale of Insurance House (plot number 12284-362 Maseru); sale of further ESTATE PROPERTIES in the sequence as listed in Annexure A ( 47 commercial buildings, houses and sites) unless the parties agree a different sequence.”
NEW PROPCO, noted the agreement, would have the right to provide the money for any shortfall, “within 24 days of a written request by the liquidators, in order to keep the rest of the estate properties. So, for example, if NEW PROPCO should provide the full M120 million upfront by 15 October 2014, no properties will be sold by the liquidators.
“NEW PROPCO shall provide proof, by no later than 15 October 2014, that their attorney holds the sum of at least M50 million in trust to provide for payment in terms of this agreement, all such funds to be released to the liquidators for payment into the estate account forthwith and reflected as a credit in favour of NEW PROPCO.”
It was further agreed that “if the agreement falls away in all its parts, then the M50 million credit will be retained by the liquidators and applied for the purchase of the properties listed on Annexure A in favour of NEW PROPCO; the liquidators will sell Insurance House as soon as possible; the liquidators will sell such further estate properties in order to raise the balance of the required amount after the M50 million in the trust account of the NEW PROPCO attorney and after the sale of Insurance House.
“If NEW PROPCO fails to provide proof by 15 October 2014 the liquidators will proceed to sell all estate properties and Thebe-ea-Khale and Ramakatsa undertake to give their full co-operation to the liquidators to sign such documents that may be required to enable them to sell such properties and transfer ownership to the buyers. Failing such full co-operation, the Registrar of the High Court will sign such documents which will be recognised as legally valid.
“When the required amount has been raised and paid over to the estate account, NEW PROPCO may propose a scheme of arrangement between the estate companies and their creditors to; transfer all remaining estate properties to NEW PROPCO; issue NEW PROPCO shares to investor creditors in lieu of their claims; irrevocably appoint Mr Cooper and Mr Roberts (or their nominees) as consultants to guide and advise NEW PROPCO in regard to management and compliance matters for the future business of NEW PROPCO and to negotiate with suitable persons to be responsible for those parts of the NEW PROPCO business as he may advise; abandon any claims against Thebe-ea-Khale and Ramakatsa and undertake not to pursue any criminal complaints or civil claims against either of them; uplift the liquidation orders and then deregister the companies in the Estate.
“If this agreement and compromise should fail for any reason, the liquidators shall proceed to liquidate the estate in the normal way with no obstruction or interference by Thebe-ea-Khale or Ramakatsa who irrevocably waive any reversionary or other rights to interfere with or object to the liquidation process.
“Thebe-ea –Khale and Ramakatsa undertake to give their full co-operation to liquidators to sign such documents that may be required to enable them to sell such properties and transfer ownership to the buyers.
“Unless this agreement is signed by Thebe-ea-Khale and Ramakatsa and returned to Webber Newdigate’s Maseru Office for attention of Mr Roberts, by Tuesday 23 September 2014, at 16:00hrs the proposals contained herein will fall away and the liquidators will proceed to sell the estate assets including the properties listed in Annexure A.”
Contacted yesterday, Mr Thebe-ea-Khale acknowledged the document while there was no immediate comment from the liquidators.
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