Nova Chair Connie Myburgh has addressed Tromp on this subject and stated broad based rejection of many of the issues raised relating to the loan and demanded that Tromp publish the response and rejections in his web site.
He has complied with Myburghs demand and we reproduce it below
But, what does it actually say? Defamatory, ignores certain crucial facts, rights to institute legal action seem to be the key words in an otherwise relatively empty communication
Regarding certain crucial facts Myburgh has chosen to not detail them but then reserves his rights to do so. We would suggest that, given our experiences of Nova/Myburgh over the years, those facts will never be disclosed (but see below)
What Tromp has revealed are the facts that he has determined from analysis of the Annual Financial Statements (AFS) and other records that he has been privy to information that is available in the public domain. Or, did he suck the information that he has disclosed out of cyberspace? Hardly likely in his position as a Chartered Accountant. From a purely ethical perspective not to mention risking negative reputational damage (Nova take note!) he is hardly likely to fabricate false narratives
Tromp has informed that the saga commenced in 2017. Has Nova ever disclosed any information especially the purpose of the loan(s) and logically, how same was to be of (ultimate) benefit to the Debenture- as well as the Shareholders (hereafter, the Investors) or other reason that would have justified the borrowing? The answer is no! Not a word in any of the last eight years AFS
That the Investors were never informed of the loan and its purpose in the first place, and not informed of the underlying problems which led to the escalation of the liability to 67.5 million surely demonstrates a lack of transparency on the part of the Chairman and the Board. Of course, this is besides the lack of communication and sharing of the crucial facts which might counter the labelling of reckless trading of this borrowing
The Beneficio exposé should be read in conjunction with the content of the COR135.1.1 Complaint that Tromp has submitted to CIPC and which provides information that may well be on the agenda of the upcoming Companies Tribunal hearing into Novas failures to observe its obligations under the Companies Act and also, speculatively, its failure to repay all of the debentures by the deadline of January, 2022, as per the Schemes if Arrangement ( although this is disputed by Nova and the deadline has been extended – albeit open-endedly without an actual deadline date – following Tromps appointment and approved by him as his first action in the role)
The CoR135.1 Complaint details in addition to the Beneficio loans, the following:
* Allegation that Nova is not a Going Concern (insolvent) * Ongoing failure to meet obligations under the Companies Act * The failure to disclose information about Amogela (liberty) Mall sale * Reckless trading * The extent of Trade Payables and Tax and VAT not paid to Sars (also indicating insolvency)
The reckless behaviours that Tromp refers to are heightened by Myburghs declining to disclose those certain crucial facts which would be a component of the business decision which made sense as per the SAFLII court record ( <www.saflii.org/za/cases/ZAGPPHC/2023/324.html> www.saflii.org/za/cases/ZAGPPHC/2023/324.html) of the Gauteng North High Court record of May 2023 when Beneficio took Nova to court (and won) over their reneging on the loan repayments
That strongly suggests that the Chairman and the Board have something to hide and logic suggests that Tromps exposé will only further damage what little good reputation Nova has (if any). The correct step would be to come clean and share those crucial facts which, it is implied in the rebuttal, will justify the loan and its escalation in value. But perhaps, its now too late for that?
But of course, Myburgh has taken the opposite response path: rather launch an attack on Tromp and threaten legal action – which of course will have to be paid for out of the limited company funds. We suggest that the legal case history so far viz a viz the Beneficio loan indicates that a further case will also fail and with costs against the company and thus the (possible) action will be a total waste of time and money
And, just by the way, the fact that the debentures for Tarentaal Centre and The Village Mall were repaid in is immaterial. This issue is not about damage to the Investors but to the company as a whole and its viability for the purpose of operating successfully to deliver repayment on all of the remaining debenture liabilities
Tromp has already posted on Amogela (Liberty) Mall and Beneficio. What others where there has been no communication out of Nova – need to be brought into the public domain and under the spotlight?
Cold Creek
The acquisition of this property remains undisclosed by way of any explanations. This notwithstanding the fact that Nova may enter into asset acquisitions in order to achieve its purpose. But such acquisitions should be transparently explained
Read these Moneyweb articles. The second one states that Myburgh got himself out of a financial hole at the expense of the Investors
<www.moneyweb.co.za/in-depth/investigations/nova-has-sold-more-than- half-of-its-investment-properties/> www.moneyweb.co.za/in-depth/investigations/nova-has-sold-more-than-h alf-of-its-investment-properties/
<www.moneyweb.co.za/in-depth/investigations/how-former-sharemax-inve stors-saved-connie-myburgh/> www.moneyweb.co.za/in-depth/investigations/how-former-sharemax-inves tors-saved-connie-myburgh/
and weve recorded these questions so far:
* Where did the money come from? * Which properties were sold round about that time and what became of the sale proceeds? Were they used to finance the Convey Assist (CA) acquisition * The other directors agreed to buy CA. Myburgh recused himself from the decision process. Its very hard to believe that he did not influence the directors in some way towards the correct decision to rescue him (and the other CA directors?) * Nova paid what was owed to RMB thus preventing call up by the bank under the CA director suretyships but what were the CA assets that they assumed and what happened to them? Were there any assets besides the CA/CC property? * It cant be right (justifiable?) that Nova also assumed a loan account in the name of Myburgh (and perhaps other directors)?. Were those loan accounts ever liquidated/repaid? If yes, how much did Nova pay out all told subsequent to acquisition? * If CC was sold according to the April 21 Moneyweb article how were the sale proceeds applied?
Here again, what were the Investors told about the acquisition of the property and how same would be beneficial as regards the prospects of future company success and progress towards, if not some actual delivery, of debenture repayments?
Rivonia Square: One of the early sell-offs of the inherited Sharemax assets
Read these documents regarding the sale of this property:
* From a periodic Nova Communiqué in December 2012: <www.ndcag.co.za/go/20250922-1> www.ndcag.co.za/go/20250922-1
* A letter addressed to Rivonia Square investors in November 2016: <www.ndcag.co.za/go/20250922-2> www.ndcag.co.za/go/20250922-2
In summary:
* Property sold in 2012 * Sold for less than book value * Nova advised that sale proceeds were ringfenced and invested to grow to an amount sufficient to enable debenture repayment and that monthly income (presumably a portion of the monthly interest/growth) would be paid to relevant Debenture Holders * In November 2016 they advised that (the usual sob stories) due to adverse funding circumstances and consequent impact on the business, the income would no longer be paid
And then? It seems obvious that that ringfenced amount plus any growth (after income payments) was absorbed into the operating capital of the business and disappeared partly, no doubt, used to provide the directors with their regular remuneration (which, in our opinion is a key component of the value extraction that has taken place over the years)
But, the content of the two documents provides no information on what was to be done with the ring-fenced Rivonia sale proceeds. What the November, 2016 letter does show is, again, total lack of transparency on the part on Nova, expecting the Rivonia Square Investors to suck it up without any undertaking (however nebulous same might be) on the prospects of debenture repayment. Its actually disgusting!
And in this regard, the following from a recent media post, the content of which resonates with us:
<www.timcohen.co.za/r/cd12b54b?m=4bf85033-d65d-4c87-bbd4-eb345b14baa 1> www.timcohen.co.za/r/cd12b54b?m=4bf85033-d65d-4c87-bbd4-eb345b14baa1
Quote:
The business rescue sector really emerged out of the liquidations business, as companies involved in liquidations pivoted to this new opportunity. There are plenty of great business rescue practitioners out there, and its important to have them in order to save as much as possible of struggling businesses. But the record also shows that there are plenty of dodgy organisations too, which deliberately stretch out business rescue operations to keep the fees flowing.
And we all know what the opinions of the majority of the Investors are (including those of NDCAG) about where Nova fits into the above description of the Business Rescue industry