Saturday, January 22

Nova bondholders face rescue vehicle Sharemax

The appointment of a new trustee for the Nova Debenture Trust may cause Nova’s bondholders to rebel against the company that did not repay them according to Sharemax’s original payment schedule.

A group of Nova bondholders sent a letter to Nova and appointed activist Deon Pienaar to become the new administrator of the Nova bond trust. This trust establishes how former Sharemax investors should be repaid.

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The position became vacant after Derek Cohen resigned as trustee in July 2019.

At the time, Nova stated that it considered Cohen’s resignation illegal and did not initiate the prescribed process to replace him.

The company informed the bondholders that it fired Cohen earlier this month and announced that it called a meeting for January 11 next year in which the bondholders would vote for a replacement.

Read: Nova’s board circumvents disclosure obligations

However, Nova Debenture Creditors Action Group (NDCAG) sent a letter to Nova’s board stating that Cohen resigned in 2019 and that Nova did not adhere to the requirements set out in the trust deed to replace him and therefore lost the authority to propose a candidate.

The NDCAG describes itself as an organization representing “members and bondholders who have given their powers to the NDCAG (or will continue to give) or one or more of the members of its operating committee.” Herman Lombaard and Roger Johnson signed the letter as members of the operating committee and bondholders.

The NDCAG letter refers to a clause that states that if the Nova board does not appoint a trustee within the deadlines set forth in the trust deed, the bondholders could nominate their candidate.

Nova’s board of directors had to immediately inform the bondholders of their resignation in terms of the clause. Nova then had 90 days to nominate a new manager and call a meeting where bondholders could approve their appointment. If Nova failed to do this, the bondholders could nominate their own candidate.

“Given the multiple failures of the Company regarding appropriate actions and communication after resignation, we believe that bondholders have the right, in terms of Clause 15.2 (of the bond trust deed), to appoint a new trustee on their own, ”the letter says.

NDCAG rejects Nova’s attempt to call a meeting as Nova acted outside of its authority and says that “the meeting should not … not take place.”

The organization also rejected Nova’s appointment of Mr. J Tromp as the new administrator. “We reject your nomination of a person who is completely unknown to the bondholders, who cannot be found in internet searches and about whom you have not provided any details in your trustee appointment emails, leaving you (possibly) given , with the smallest detail, in the meeting of January 11 and in the usual way of Nova: hurry, you wait, with a minimum of debate and answer ”.

New candidate

The NDCAG has nominated Pienaar as its candidate to take over as its new administrator. The letter highlights that he has fought for the affected people for more than a decade “to address irregularities and injustices (if not criminality?)” Of the events that led to the disappearance of Sharemax, the business rescue process, the sanction from the section. 311 Schemes of Arrangement (SoA), and the destruction of value suffered by former investors.

The letter also indicates that Pienaar would be the ideal candidate, as NDCAG believes that it cares about the interests of the bondholders.

The trustee is the trustee. If Pienaar is appointed, he will represent the bondholders in an essential structure of the Sharemax rescue plan. Currently, there is no person representing the bondholders in any Nova structure.

Pienaar’s answer

Responding to Moneyweb’s questions, Pienaar said that in the past he has taken legal disputes to court on behalf of thousands of affected parties “whom I refer to as victims of crime.”

“Now, for the first time, I will be able to get legal representation to take these legal disputes to court and be treated fairly.

“My cases will no longer be dismissed for technical and procedural reasons only, and the merits can be heard for the first time. I will have the fiduciary duty to present disputes before the courts, so that the rule of law can be fulfilled, as provided in our Constitution.

“Second, we will have the right to access information, a right that we have been deprived of.”

Pienaar added that Nova has been in violation for a few years.

“The SoA clearly stipulated in which year which building, which had belonged to an independent and autonomous Property Syndication, should repay the original bondholders their original capital. If this SoA had been properly regulated as a SARB approved payment plan, and the Trustee, Trustees and Regulators had done their job for which they were more than generously compensated, this breach could have been addressed as early as 2014 ”.

“I pray for 2022, that the Lord allows it to be the end of this saga that has affected so many destitute victims (sic). It is my prayer that everyone will be compensated for their losses as soon as possible and that the people who acted illegally can face the consequences of their actions and conduct, ”said Pienaar.

“I am confident that bondholders will continue to send their proxies to me at [email protected], even though we are in the holiday season, a well-planned strategy from Nova.”

Nova must allow the media to attend meetings

The NDCAG also requests that Nova allow members of the media to attend meetings between the company and shareholders and bondholders, especially if they have valid power of attorney from a bondholder.

This follows after Nova rejected this journalist’s entry to the company’s recent annual general meeting, despite having valid power of attorney.

Read: Moneyweb publisher physically and forcibly denied entry to Nova’s AGM

CIPC actions and postponement of the repayment of the bondholders

These developments follow the CIPC issuing two compliance notices to Nova, which may lead to the company being placed under administration. Nova also announced that it would not pay out unsecured bonds this year, even though it promised to start doing so in April.

Nova, which is suspected of having significant financial problems, says it will only begin to repay obligations after the expiration of the ten years specified in the SoA deed of trust. The ten-year period expires on January 20, 2022.

Read: Sharemax rescue vehicle takes a 180 degree turn in investor payments

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