Guptas' flagship Oakbay faces liquidation application over R2m unpaid rent

2018-09-11 17:25
(Supplied)

(Supplied)

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Business rescue practitioners appointed to save a Gupta business have filed an application for the liquidation of the Gupta's flagship company, Oakbay Investments, as a result of its failure to pay rent to another Gupta-owned company, Tegeta.

In court papers filed in the Johannesburg High Court on Tuesday, Kurt Knoop, one of the business rescue practitioners states that Oakbay Investments owes Tegeta Resources and Energy just over R2m for the rental of its Sandton offices.

Tegeta is one of seven Gupta companies placed under business rescue in February this year.

According to Knoop's affidavit, Oakbay Investments entered into a rental agreement with Tegeta for the offices in Sandton in October 2013 for R150 000 a month.

For the past 12 months rent has not been paid, and Tegeta is now seeking the liquidation of Oakbay investments to recoup R2m it claims is owed to it.

On June 27 this year Tegeta's attorneys addressed a notice to Oakbay Investments demanding payment. It gave the company three weeks to either pay or reach an agreement to pay the amount.

But instead of coughing up, on July 10 attorneys for Oakbay instead wrote back demanding payment of "management fees" from Optimum and Koornfontein coal mines it claims are overdue.

Oakbay being 'strangled economically'

"Our clients' main stream of income is derived from, among others, management fees that are due by companies under business rescue," the letter read.

The letter claims that the failure to pay the management fees was a deliberate ploy by the business rescuers to "strangle our client (Oakbay Investments) economically".

"Not one single company is in a better position after your clients (the business rescue practitioners') were appointed than before they were appointed. Your clients cannot complain of the fruits of their constructive malice toward our client."

It adds that the funds owed to Oakbay Investments, far exceed the amount owed to Tegeta for the rent.

Knoop points out, however, that the management fees mentioned are allegedly owed by Optimum and Koornfontein, which are both under business rescue, not Tegeta.

"To date the respondent (Oakbay Investments) has failed and/or refused to pay the amount demanded in terms of the notice, or any amount whatsoever, to [Tegeta]," Knoop said.

"I have also been advised that the respondent is deemed to be unable to pay its debt as contemplated in the company laws of the Republic of South Africa and is liable to be wound up."

Complicated business structure

Oakbay Investments owns 79.9% of Oakbay Resources and Energy, which between November 2014 and June 2017 was listed on the Johannesburg Stock Exchange.

The opaque structuring of the Gupta empire's shareholding and corporate entities makes it difficult to establish which other Gupta entities Oakbay Investments may hold shares in.

However, annexes to Knoop's affidavit set out that Oakbay Investments is 40% owned by Gupta company Islandsite Investments 180. Atul Gupta and his wife Chetali own 30% each.

Islandsite 180 in turn is owned by Rajesh, Arti, Atul and Chetali Gupta – each holding 25%.

Oakbay Investments also owns about 80% in Sethemba Coal and Sandile Coal, respectively. Little is known of these two companies but records show that Oakbay Resources CEO Ronica Ragavan and other Gupta associates are the directors.

It is, however, the largest shareholder of Oakbay Resources, alongside overseas entities Saranya and Action Investments. The Industrial Development Corporation also holds 3.6% as a result of a R250m loan it advanced the Gupta family to purchase Shiva Uranium in 2010.

Assets could be put up for public auction

Shiva, which is Oakbay Resources' biggest asset, owns three Gupta mines – two uranium and gold mines in the North West, Shiva and Rietkuil; and a coal mine in Mpumalanga.

Shiva has been reported to have some of the biggest deposits of nuclear fuel in the world, but a down-in-the-dumps uranium price kept the uranium processing plant on standby.

It is understood that the mine has been operating as an opencast gold mine – sifting the tailings from previous mining to draw out any gold.    

If the liquidation goes ahead the 74% of Shiva and any other assets owned by Oakbay Investments could be up for public auction.

Ragavan, who is also a director of Oakbay Investments, did not immediately respond when asked if the company would be opposing the application.

Read more on:    tegeta  |  oakbay  |  gupta family

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