One of Ballito’s largest car dealerships, the SMD Group, is pushing back at Absa Bank which they accuse of trying to bully them into liquidation.

The group, operating from its two storey-premises in the business park, is the agency for Jaguar, Land Rover and Ford, and also has a large stock of exotic cars – Lamborghinis, Ferraris and Porsches.

The group was founded in 2003 and employs 141 people.

Absa brought an urgent winding-up application brought before the Durban high court shortly before Christmas, claiming the group has a debt of more than R400 million which it is unable to pay.

Franchise director Shaun Duminy is disputing the claim, responding that the debt is R157m and that the bank has ignored an offer from a private equity firm to buy the company for almost R200m.

Absa head of credit Anthony Evens said in the application the initial agreement with SMD had been for a R155m general and floor plan credit facility.

Since December 2017, SMD had tried to trade its way out of trouble and failed, he claimed.

In spite of granting SMD a temporary increase in its overdraft facility, it had not been able to reduce the debt.

He believed that because of a steep drop in demand for exotic cars, an intervention was needed to prevent the complete collapse of the company.

According to Evens, SMD’s sales of exotic cars had dropped from R244m in the year to end February 2017 (an average of R20m a month) to R69m in the eight months to end October.

Gross profit dropped from R9m in the 2017 financial year to a loss of R8m in the eight months to end October.

But Duminy said a consultant engaged by the bank to assess the business had recognised that the core business of Jaguar, Land Rover and Ford was “healthy, well located and has strong franchises”.

He said there were disputes that could only be resolved by a full trial where the bank would be “hard pressed to prove its claim”.

He said the initial credit agreement, now relied on by the bank in its legal action, had terminated in August 2017.

While Absa claims the dealership owes R434m, the latest statement shows that SMD owes R111m and R46m for the floor plan.

The business had also managed to repay R107m of debt in the past 12 months.

Six deals done in early December, for vehicles ranging in price between R200,000 and R2m, were at risk because the bank was refusing to allow the transfers, Duminy said.

The bank had also not disclosed that Chroma Capital wanted to buy the business for R182m, exclusive of the value of the stock.

“He is aware of this but instead is seeking to destroy the business.

He mocked it as being a front, when it is a professional organisation run by investment bankers.”

Judge Gregory Kruger refused to consider the matter, saying that it was not urgent, and ordered Absa to pay SMD’s costs. Absa has indicated it would continue with the application this year.