Nova Propgrow Group Holdings said yesterday that a Companies and Intellectual Properties Commission (CIPC) notice stating that it should not be allowed to sell properties until after further inter-regulatory intervention was “flawed” and a legal team was drafting papers to review the compliance notice.
Nova’s management said in response to Business Report questions, however, that they accept that the notice, issued last week, was binding, pending its review, and its terms would be abided by.
Nova was initially the subject of an investigation by the CIPC for allegedly trading recklessly and while insolvent, in terms of an initial notice, early in 2021. The CIPC subsequently accepted that this request to show cause was adequately addressed and this aspect no longer forms part of the current CIPC’s complaint.
In 2011, some 19 000 Sharemax investors voted for Schemes of Arrangement (SoA) providing, inter alia, for the payment, over a projected 10-year period, of amounts to historical investors, who had become debenture holders in Nova, following the R4.6 billion investors had invested in South Africa’s largest failed property syndication scheme. The SoA provided for Nova to take ownership of the former Sharemax properties.
Nova’s management said there were misunderstandings relating to Nova’s role.
The 10-year period was a projected period based on circumstances at the time of the structuring of the SoA. Debentures could be paid at any time, depending on circumstances, to achieve payment to the best extent possible.
The second misunderstanding was a so-called requirement to pay some R4.6 billion, Nova said.
The company said it “does not have the obligation to pay the some R4.6bn invested historically by Sharemax investors”. Nova instead had the obligation to pay amounts equating to the fair market value of relevant properties from time to time. Nova holds a portfolio of retail, offices and mixed use properties valued at R2.7bn across South Africa.
The third misunderstanding, the company said, related to the notion that it was created solely to pay debenture debt.
“This is not so. Debenture debt is merely a particular class of creditors of Nova. Nova is entitled to do business in the ordinary course, independent of only attending to payment of debenture debt. The SoA makes it clear Nova has been established to conduct business in the normal course, and will continue conducting business post the payment of its debenture debt,” the company said.
Another misunderstanding related to the notion that Sharemax historical investors had lost everything.
“Ex-Sharemax investors, now Nova debenture holders, have most certainly not lost everything. On the contrary, Nova over the last 12 years has worked tirelessly to achieve its objectives to unlock optimum value for investors and shareholders, and to maximise capital payment of its debenture debt, with the resources available to it,” the company said.
“Nova remains independent as a well-managed group of companies, with property management and development, accounting, tax and company secretarial services rendered by professional and knowledgeable private companies,” it said.
The process of debenture-related debt payment was taking longer than initially planned and projected, the company said.
“This is mainly due to various challenges over the past decade. Such a large restructuring which Nova took on, by its mere nature and given the ex-Sharemax-linked history, brings with it much criticism and negativity, further fuelled by often unjust, negative and even incorrect media reporting, unfortunately resulting in many funding lines, equity partnerships, including a proposed Listing of Nova in 2019, all key to value enhancement and resultant Debenture payments, not coming to fruition,” it said.
edward.west@inl.co.za
BUSINESS REPORT