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NOVA’S AUDITORS FILE A REPORTABLE IRREGULARITY WITH THE IRBA

We’ve mailed to all NDCAG members the link to a this week’s Moneyweb post on this topic

What is the nature of the irregularity?

Whilst not specifically stated in the article, it appears that the auditors have reported the company’s failure to publish its financial statements for 2019. In terms of the Companies Act, such publication must take place within six months after financial year-end (28 February)

What does this say about the company and what does it say to the Debenture Holders?

In addition to the “significant developments” detailed in the article there was a December, 2018 Moneyweb post in which it was contended that the company was, at that time, all but bankrupt

We’re now a year further down the line and the company, seemingly, can’t, or won’t (despite the legal risks) publish the overdue financials

Why not?

What are they hiding?

Note also the information in the latest article on the new content on the financial statements in the Nova web site (https://novapropertygroup.co.za/index.php/financial-statements-2019/#). We cannot say what appeared there prior to the complaint submission by the auditors but the article content implies that once the complaint had been lodged, Nova rushed to publish a statement of “explanation” as to when the financial statements will be available    

Are they fooling anyone with that statement?

So what if they make them available when they submit their CIPC (Companies and Intellectual Properties Commission) Annual Return with financial statements? That’s got nothing to do with the issue and is certainly not an acceptable explanation for Debenture Creditors. 

The fact remains that they are in default as regards their obligations under the Companies Act and surely, that failure requires an appropriate explanation and not some “delaying tactic” statement that is clearly designed to fob off any web site visitor who is looking for the 2019 financial statements that should have been published at the end of August.

Again, what are they hiding?

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Nova selling The Villa complex?

See the recent Rekordeast article on this at https://rekordeast.co.za/215235/villa-mall-could-be-complete-in-3-years/

There’s no mention of this via a Communiqué or a Press Release in the Nova website but perhaps that’s

understandable if negotiations are still underway

One might wonder, though, if they would announce the sale if and when it takes place anyway? Or,will they leave

their Debenture Creditors in the dark as is so often the case

Will this sale result in debenture payouts? 

Dare we hold our collective breaths this time?

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Could you Help Us with this?

Hello NDCAG members

We can now announce that we have topped the 50 membership mark – primarily Debenture Creditors (DCs) but also some brokers

Not a huge achievement you might say given the time since NDCAG started (Nov 2017)

Not a huge achievement as concerns mobilisation of the DCs over the nearly 10 years since the Sharemax “collapse”

Simply put, we at NDCAG have just not been able to reach all DCs and as you may be aware, Nova has declined to recognise us or give us the necessary contact details

So the purpose of this mail is to put a proposal to you by way of requesting a “contribution” to the cause from you

The opportunity exists to initiate a recruitment drive using SMSs

Would you be willing to “donate” say, 10 of the SMS‘s that you have under your cell phone contract (we appreciate that this will only apply to some members and that differing cellphone contract/prepaid features will apply) to use to message a list of 10  DC numbers that we will supply and with a message from us? The numbers will be those on a list of supposed DCs that was given to us way back and which contains only telephone #s

(We mention that we have looked at using a bulk SMS service but have found two inhibitors: 1) cost: cheapest per message price seen is 20¢ and to reach all on our list would cost 7000 +/-, 2) integrity of the contact list: not good. It does not have a cell # for all persons in same and rejection rate may be high – the list is old)

Here’s the objective:  if our current 52 members could reach 520 supposed DC’s via the numbers that we provide, this might result in up to 520 new registrations

If we repeat the exercise after say a successful pilot effort, we’d have 572 members potentially reaching 5720 supposed DCs which might take our membership up to 6292 (ignoring ‘rejections’)

Another two rounds of this exercise could take us to a “critical mass” membership level where we could knock on Nova’s door and demand recognition and representation. We could become “the voice of the Debenture Creditors”

Of course, the above outcomes imply a 100% response by the SMS recipients but it is not necessarily “pie in the sky” stuff. If we can initiate and then broaden this, to recruit a significant number of DCs, perhaps NDCAG, representing the member DCs (but also working for non-members) will have acquired a level of “clout” that the Nova board will be unable to ignore and  thus get a foot (and more)  in the door and start addressing the ongoing issues effectively on the inside rather than ineffectively from the outside as has been the case for almost ten years now

So, will you assist with your participation?

To implement, we will have to:

– prepare a sufficiently short yet compelling SMS text for transmission
– prepare the “rules of engagement” for participant members (which will include a specific request that SMS message          recipients are not to respond to the sender)
– track who has been addressed and who not
– prepare for the future expansion to rounds 2,3 and beyond if viable

But, meantime, please consider the above and revert (we hope) agreeing to participate

Should you need to ask any question re this or if you have any suggestions, please email us at [email protected]

We look forward to plenty of positive responses and thank you in anticipation of same and will decide on actually proceeding based on the take-up from this mail

Yours in the Cause!

NDCAG

PS: Apologies for only being in English. If you want it in Afrikaans, request same to [email protected] and we’ll send you a translator version – which may not be entirely accurate

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Outcome of the Auction

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.

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Standard Bank severs links with Nova Property Group

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.

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Nova Selling Off Assets

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

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The Villa – Business Insider Review

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?

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Moneyweb’s Ryk van Niekerk – Nova teetering on the verge of insolvency – What you need to know.

Moneyweb’s Ryk van Niekerk  has published an article today titled “Nova teetering on the verge of insolvency” – see www.moneyweb.co.za/news/companies-and-deals/nova-teetering-on-the-verge-of-insolvency/

It paints a gloomy picture from a DC standpoint although despite the interpretations and conclusions of the author, the Nova directorate state that the company is in a healthy state.

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”

What does this mean?

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!