The activist who is challenging the legality of the Reserve Bank’s determination that the former Sharemax investment scheme contravened the Banks Act, has applied for an urgent interdict to stop the proposed listing of the Nova Property Group.
This follows the announcement by Nova that it wants to list the remaining properties within the group before the end of the year. If the listing takes place, this would see investors’ debentures converted to shares, which would be tradable on the JSE. The listing is dependent on the 31 000 debenture holders approving a Section 155 Scheme of Arrangement during a special meeting in November.
It is this approval process activist Deon Pienaar wants to stop. He is a former financial advisor who earlier this year filed an application in the High Court in Pretoria to review the legality of the Reserve Bank’s original 2011 directive that Sharemax contravened the Banks Act. This directive resulted in the collapse of the Sharemax investment scheme, and led to the sanctioning of the Section 311 Scheme of Arrangement that brought Nova to life.
Pienaar also wants the original Section 311 Scheme of Arrangement set aside. This case will be heard in January next year.
Default and Nova name change
In court papers Pienaar questions the Nova directors’ motives for proposing the listing, stating that it is merely an effort to “conceal the fact that they have defaulted on their Section 311 Scheme of Arrangement”.
This refers to Nova’s inability to generate income from the remaining Sharemax properties in its portfolio to honour capital repayments to debenture holders. Interest payments were also suspended last year.
Pienaar also takes issue with structural changes within the Nova group. These saw the name of the original Nova Property Group Holdings (the company brought about by the Section 311 Scheme of Arrangement) changed to Nova PropGrow Group Holdings, and the registration of a new company with exactly the same name as the original company with new directors.
He says the registration of the new company was an effort by the directors to circumvent the relief he sought in his review application. “This will indemnify themselves from their unlawful actions conducted after the Schemes of Arrangement and ‘distance’ themselves from the historical Sharemax companies.”
Nova did not respond to Moneyweb questions (see statement below). The directors also haven’t had the opportunity to respond to Pienaar’s application for the urgent interdict. The company did however respond to Pienaar’s enquiries prior to his application and said that while the company he cited as a respondent had changed its name, it retained its original registration number. Hence there was no confusion as to the identity of the company cited in the original application.
Proposed listing not in the interest of debenture holders
Pienaar also stated in his affidavit that the listing it is not in the interest of debenture holders. “lt is not in the interest of the thousands of investors to be ‘distanced’ from the original Sharemax ring-fenced companies in which they chose to have been shareholders. They are now forced to become ‘watered-down shareholders in a portfolio’ and if they refuse they are threatened with an alternative liquidation scenario. They are hostages to proceedings they have no alternative to unless the truth is disclosed of how they were misled to give up their property rights….”
Nova suspended all communication with Moneyweb last year. Here is the final response received from Dominique Haese, CEO of Nova:
Dear Mr van Niekerk,
It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.
It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb.
We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.
Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.
CEO Nova Property Group
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