We’ve mailed members with the link to the Moneyweb post on this topic but we’re repeating it here to keep it visible (it seems that Moneyweb articles go into an archive after a while – requires subscription and payment to access there).
As advised in our broadcast mail, we’re working on our assessment of the auction event and will post soonest.
Please go to https://www.moneyweb.co.za/in-depth/investigations/nova-properties-auctioned-off/ for the full text of this media article.
Go to https://www.moneyweb.co.za/in-depth/investigations/nova-properties-auctioned-off/
We are working on our evaluation of the event and will post in the web site in due course.
We can only speculate at this time what Standard Bank’s reasons are (think Guptas and Oakbay?) and what it will lead to. Meantime, at the time of writing, the planned.
The auction is still scheduled to go ahead tomorrow, 30 May 2019.
Will this latest development lead to a business rescue? Forensic Auditor André Prakke is not the only commentator who holds this view with its important factor that it will.
Remove the powers of the board to continue to sell off the assets.
Please go to: https://www.moneyweb.co.za/in-depth/investigations/standard-bank-has-closed-novas-bank-accounts/ for the full text of this media article.
We have become aware of the impending sale of five properties in the Nova Property Group (up for Auction through Auction Inc on 30 May) – all in the former Sharemax stable and all linked to debentures held by Nova Debenture Creditors (DCs)
It did not surprise us that there had been no announcement by Nova to the DCs of their intentions and we connected with Ryk van Niekerk of Moneyweb in the matter
Ryk has posted on this event (https://www.moneyweb.co.za/in-depth/investigations/nova-plans-to-sell-another-five-properties/) and included excerpts from comments that we provided
Here is the full text of our comments:
Speaking for the Nova Debenture Creditors Action Group (www.ndcag.co.za), Chair Roger Johnson has stated that the group is gravely concerned that the intended disposal of yet more of the assets of Nova Property Group, the very assets that are the core of the company and that represent, ultimately, the original investor’s (now Debenture Creditors – DCs) value in same, will lead to yet further reduction of the asset base and estrangement of sale proceeds which money should be applied to redemption of the Debentures
This did not occur with the Rivonia Square property which was sold in 2012. In November 2016, the Nova board announced that the monthly interest payments to relevant DCs would cease. In their announcement, they made no mention of their intentions as regards the capital amount – the sale proceeds – which had, up to that time, been ring-fenced for eventual use to repay DCs. That capital has since disappeared.
During 2017/18, four properties were sold (Checkers, Virginia for 36.4 million and Benoni Hyper, Silver Water Crossing and properties related to Brookfield Investment for a total of 284.5 million) without any pre- or post-sale communication with the DCs except for a March 2017 communiqué to the effect that debenture holders in the Silverwater Crossing and Magalieskruin properties had been repaid.
Why are some sales proceeds applied to debenture repayment and others not?
NDCAG suspects that, as with Rivonia Square, the other funds received from a number of these sales have been diverted into the company’s working capital and have been applied to who knows what undeclared purposes and expenditure. Perhaps it is this money that is keeping the company afloat and funding the allegedly excessive remuneration of the directors?
So, with the intended sale via auction at the end of May, what is the likely outcome if sale does eventuate? Will there be a further repayment or will these funds also “disappear”?
NDCAG notes also that the board stopped communicating with the DCs by way of quarterly communiqués some years ago. They published a communiqué with information on some of the commercial properties including, co-incidentally, the properties now up for auction, in their web site in February but, contrary to past practice, did not inform the DCs of same by way of the usual SMS message distribution. NDCAG is not surprised about this “omission” as it has been clear to us and DCs for a long time that communication is not high on Nova’s priority list
When approached during 2018 for recognition of NDCAG as a representative forum of DCs, the board (deliberately?) failed to respond to the request whilst at the same time, declining to provide the Group with contact details of the DCs, requested under the Promotion of Access to Information Act. This only serves to demonstrate further that the board has no interest in communication except on their own terms and has no interest in dealing with the DCs as a collective
NDCAG welcomes any communication that the board might issue in response to these comments
Business Insider posted a review of The Villa in December – accessible at:
https://www.businessinsider.co.za/sharemax-villa-shopping-centre-collapse-irene-pretoria-2018-12
It’s not at all encouraging and perhaps a significant statement in the article is the final paragraph:
“To date, all the neighbors have been told is that the project is still waiting for a cash injection.”
So, the neighbors receive communications from Nova? What about the Debenture Creditors?
The last communication published by the Board was in November, 2017 when they were looking to get the Debenture Creditors to vote in favour of the share listing and which has since been dropped.
There was a time when they undertook to publish a quarterly communication but these have fallen by the wayside.
Why? Is it because they remain unwilling to communicate with their primary debtors? Is it that there is nothing to communicate because they are not doing anything to resolve all the issues faced by the company – not least, how to repay the investors –whilst allegedly drawing above market salaries. other remuneration and fees?
At NDCAG we take their protestations with a pinch of salt and we anticipate that all DC’s will probably feel the same.
Along with the implied possibility that the company could go into liquidation in the near future, there is a snippet of news in the article that piques our interest.
It is stated that the company sold a property during the 2017 financial year and that three more properties have been sold this year – “Checkers Virginia for R36.4 million and … subsequent to year-end, three additional properties were sold for R284.5 million…Silverwater Crossing, Benoni Hyper, and properties related to Brookfield Investments.
This begs the question: Will the proceeds of those sales be used to pay out the relevant Debenture Creditors (if they were indeed sold for an amount that meets or exceeds the total of the DC investment)?
It might be logical to expect that payouts for the four properties will be according to the relevant Schemes or Arrangement and their timetables.
Alternatively, will the sale proceeds be ring-fenced (and protected?) until the defined time that the payouts should take place?
Should DCs be optimistic either way? We know what happened with the sale proceeds of Rivonia Square which, according to Nova’s circular issued at the time, the proceeds were to be ring-fenced and allowed to grow – whilst still paying DCs a monthly income – until such time as it had accumulated sufficiently to enable payout to the DC investors.
When they stopped the income payments for Rivonia Square in November 2016 no mention was made in their circular to the affected DCs of the fate of the Rivonia sale proceeds and DCs have been left to draw their own conclusions and/or to believe the various stories and allegations that float around.
It is perhaps significant that the Board has issued no communication to the DCs regarding the latest sales and so we suggest that DCs should not be optimistic regarding payouts anytime soon if at all and perhaps, DCs should expect that the sale proceeds of the four properties will also “disappear” a la Rivonia Square.
This brings us to why the NDCAG was established and re which, a short story:
A Debenture Creditor (DC) called in to NDCAG on 29 November. He told us that he’d called the Frontier offices earlier in the day and ended up speaking with a person (name not recorded but apparently, not a member of the management or the directorate) who advised that “payouts will be made and will take place over time and up to 2022”
Is there a definite and operative (or soon to be operative) plan to commence payouts? Are these payouts a “new arrangement” outside of the Schemes of Arrangement or are they only to be effected in terms of the provisions of the various Schemes of Arrangement and their timetables?
Can our caller be expected to deduce the correct answer from the rather superficial information give to him?
Can our caller be criticised if he interprets the answer received as a definite intention to commence payouts soon?
If there is a new arrangement being implemented in the near future, when will Nova publicise it? Given the plight of so many of the DCs, many of whom were wiped out by the shut-down of the property syndication industry by the Financial Services Board, would Nova not want to announce the new arrangement as quickly as possible and thus, at the very least, give the DCs some hope?
That they have not publicly announced a payout scheme as was inferred by our caller, leaves us to deduce that the Nova employee who interacted with the caller was really just fobbing him off with a vague reference to a payout scheme that probably is in fact, only that contained in the Schemes of Arrangement
In any event, Nova is allegedly so broke (and seemingly confirmed in the Monwyweb article) that they couldn’t pay out even if they wanted to
Referring again to the plight of so many of the DCs does Nova not have an obligation to be precise when called upon for information on payouts by persons who call their offices? Should such calls be handled by relatively junior and ill-informed employees of the company? Should such calls not be dealt with by a senior and responsible office of the company (the Information Officer)?
NDCAG was established to become a representative body for the DCs. This is why we call for all DCs to register with us via our website at www.ndcag.co.za and in the process to give us their mandate to speak and act on their behalf. With a significant membership, we look to persuade the Nova Board to recognise us.
Acting on behalf of NDCAG member DCs (and in effect, all of them), we look to interact with the Nova Board and amongst other things at least be able to distribute clear and precise information to our members not only regarding payout programs or changes to same, but any other information that affects the DCs.
Please feel free to respond to this posting via email to [email protected]
We will do our best to respond promptly.
Yours in the Cause!
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