Moneyweb
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3 minute read
20 Feb 2019
6:45 am

One Gupta company applies for the liquidation of another

Moneyweb

Application for the winding up of Oakbay Investments comes from sister company Tegeta Exploration and Resources.

The Tegeta application for the liquidation of Oakbay Investments details the sorry state of the Gupta companies now in business rescue. Picture: Supplied to Moneyweb

Tegeta Exploration and Resources has applied to the Gauteng High Court for the liquidation of its sister company, Oakbay Investments, claiming it owes it R3.8 million in rental and services arrears.

Tegeta business rescue practitioner Kurt Knoop says in an affidavit that Oakbay is unable to pay its debts and is therefore liable to be wound up. Both Tegeta and Oakbay are Gupta-controlled companies, though, of the two, only Tegeta is in business rescue.

In 2013 Oakbay rented office space from Tegeta at Grayston Ridge Office Park in Sandton for R150,000 a month, escalating by 10% a year. This included various services such as phone and fax connections. The lease and services agreement was extended in October 2017, but Oakbay was unable to meet its payment obligations.

This is the second time Tegeta has approached the court for the winding up of Oakbay. The first was in September 2018, when Tegeta was claiming unpaid fees of R2.05 million over a period of a year and a half. The court application was withdrawn when Oakbay paid the claimed amount in December last year.

On December 20 last year Oakbay was served notice to pay R1.38 million in rental and services arrears within three weeks. That deadline was missed, resulting in Tegeta’s business rescue practitioners bringing an application for Oakbay Investments’ winding up.

‘Insolvent, unable to pay its bills’

Attorney for the business rescue practitioners Bouwer van Niekerk says he does not see any reasonable chance of the liquidation application being successfully defended.

“Oakbay Investments is insolvent and unable to pay its bills,” he says. “There is no alternative but to apply for its winding up.”

Last year, business rescue practitioners for eight Gupta companies had to go to court to prevent Oakbay executives from denying them access to the Sandton head office. The business rescuers were successful in that case.

Gupta-owned Oakbay had its transactional banking facilities suspended by all major commercial banks in late 2017 for reasons that were not disclosed. The closure of banking facilities coincided with press reports of the Gupta family’s role in state capture and attempts to bribe senior government officials.

Tegeta stopped trading nearly a year ago, but owns shares in Optimum Coal Mine, Koornfontein Mines, Shiva Uranium and Optimum Coal Terminal at Richards Bay. Tegeta owes creditors about R4 billion and the underlying companies are in care and maintenance, though negotiations are under way with potential buyers for the mining and Richards Bay Coal Terminal assets.

The Tegeta application for the liquidation of Oakbay details the sorry state of the Gupta companies now in business rescue. Oakbay is a holding company whose value depends on the ability of the underlying companies to generate income. Virtually all of these subsidiary companies are either in business rescue or have ceased trading.

Failed business

“The entire business foundation of the respondent [Oakbay Investments] has failed,” says Van Niekerk. “It is not rational or reasonable to expect that the respondent can ever recover as a business.”

Oakbay Resources and Energy owns a 59% share in Shiva Uranium, which is now in business rescue.

Westdawn Investments, trading as JIC Mining, is in final liquidation. Its only source of income was from mining contracts it had with Optimum, which have since been cancelled.

Sandile Coal and Sethemba Coal were labour broking subcontractors for JIC Mining. These contracts have been cancelled and their employees have not been paid since at least November 2018.

The Oakbay Investments register shows only two surviving directors: Ashu Chawla and Ronica Ragavan. All other directors resigned after the Guptas were accused of wholesale corruption and the bribing of state officials.

Source: Court files – Case 5921/2019; Tegeta Exploration and Resources (Pty) Ltd and Oakbay Investments (Pty) Ltd

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