Sharemax ‘a house of cards’

2010-09-05 10:35

Controversial property syndication company Sharemax ­Investments wants to sell its ­investors’ shares to an obscure property firm that had recently been suspended from trading on the JSE and whose CEO is a rehabilitated insolvent.

Thousands of its investors – mostly pensioners – did not ­receive their monthly dividends on the last day of August. At the time of going to press, people had still not been paid.

“The Sharemax house of cards is imploding,” said financial adviser and writer Magnus Heystek. “There’s no money to pay investors.”

Financial adviser and property expert Eddy Carter-Smith said he had been in contact with Sharemax directors.

“One of them called me on Friday night and confirmed that investors in two of its major development schemes will not receive their dividends,” said Carter-Smith. “He was in tears and said they had received calls from pensioners threatening to commit suicide as these dividends were their only income.”

Sharemax, which was recently informed by the Reserve Bank that it had collected money from investors in an illegal manner, announced this week that it wanted to sell all the ­properties in its investment portfolio for R5 billion to a listed ­company named Bonatla.

Bonatla’s CEO, Niki Vontas, was declared bankrupt in 2004 because of R70?million debt. He was rehabilitated in 2008. Trade in Bonatla’s shares was suspended at one point in time.

This announcement sent shock waves through financial circles and experts said it was “very bad news” for Sharemax investors. But they agree that Sharemax had no other option.

Sharemax investors will now be issued with billions of Bonatla shares that can be traded on the JSE.

There is no guarantee that they will ever receive dividends again, and the value of their investments may plummet.

Sharemax has faced intense criticism for its financing and business model, and has even been accused of running a ­model of syndication that resembles a pyramid scheme.

City Press reported in July that the finding of the Reserve Bank could lead to investors ­losing large sums of money.

Sharemax denied the gist of the article and ­accused City Press of unethical reporting.

The drama started in August with the resignation of managing director Willie Botha. Sharemax said this week that it intends to accepted the offer from Bonatla. It is a so-called paper transaction and no money changes hands.

This was followed two days later by the investors in The Villa and Zambezi Retail Park not being paid. It is the first time Sharemax has missed payment.

Building operations at The Villa were suspended this week.

Heystek called the proposed deal between Sharemax and Bonatla “nonsense” and said investors were going to get hurt.

Sharemax said yesterday that the proposed transaction with Bonatla was to protect investors. It trusted that the conclusion of the deal would resolve the “interim non-payment”.

The envisaged takeover still has to be approved by the JSE, the Competition Commission and by at least 75.1% of investors in Sharemax syndications.

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