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Johannesburg - The dicey, condition-laden plan to sell Evraz Highveld Steel and Vanadium out of business rescue faces a new threat: an aggrieved rejected bidder is going to court to try to put a different offer to creditors without the blessing of the business-rescue practitioners.
South Africa’s second-largest steelmaker is shuttered and running out of cash while rushing to conclude a deal with white knight investor International Resources from Hong Kong.
Another group that bid to buy Highveld, Global Renewable Energy, was rejected because the rescue practitioners thought its offer was suspicious. Added to that, they say any vacillation now would probably lead to Highveld’s liquidation.
That hasn’t stopped Global Renewable Energy from going to court to try to have its seemingly incredibly generous offer put to the creditors of Highveld, which vote on the way forward in a week.
This week, at a creditors’ meeting in Sandton, some of the 300-odd attendees demanded more information about the bid.
Piers Marsden, one of the business-rescue practitioners, was forced to repeatedly justify a rejection of the offer, saying Global Renewable Energy had refused to place a $10 million (R139 million) guarantee with a South African bank.
Global Renewable Energy’s bank guarantee comes from a US private equity firm’s office in St Lucia. Global Renewable Energy calls the demand for a new guarantee a moving of the goalposts, and maintains that its St Lucia one is “valid and enforceable”.
The incredibly generous offer, plus promised new investment into Highveld, comes to about R5 billion.
“If they are offering R5 billion, but cannot show us that they have $10 million, one questions the veracity of the offer,” Marsden said. “If we proceed with this route, we will in all likelihood end up in liquidation.
“It is simple. There is no cash,” he told creditors.
Global Renewable Energy already tried to stop a vote on International Resources’ bid with an interdict, but it got struck off the urgent roll last Friday.
One of Global Renewable Energy’s directors, corporate lawyer Connie Myburgh, came to this week’s meeting and was applauded when he told the creditors that “the bid has not been withdrawn and we will proceed”.
“The next step in the proceedings is that the validity of the exclusion of Global Renewable Energy’s offer will be determined by the court, probably within the next two weeks,” he told City Press.
The bid entails paying all creditors 100% of the more than R1 billion they are owed, and settling a looming SA Revenue Service (Sars) bill of about R400 million, among other requirements.
If the International Resources deal goes ahead and Sars uncharacteristically drops its claim, all creditors lose at least 71% of the money they are owed by Highveld – in the best-case scenario.
Bona fides
Global Renewable Energy is a company registered in the Isle of Man in 2012. In 2013, it was going to buy assets from Jubilee Platinum for $14 million, but the deal fell through after the company simply failed to come up with the cash, according to Jubilee’s notices to shareholders at the time.
Global Renewable Energy paid a nonrefundable deposit of R8.7 million, but then “regrettably has not honoured its contractual payment deadline”, Jubilee announced last year.
“The Global Renewable Energy deal ... has been formally set aside and no longer exists,” Jubilee CEO Leon Coetzer told City Press this week.
Myburgh denied this.
Global Renewable Energy is an investor in Harrison and White Investments, which, in 2011, was announced as the South African partner in a wind farm project in Lesotho, which is not off the ground yet.
