Swiss-based company Charles King SA’s sole director Amin Al-Zarooni has launched an urgent court bid to stop business rescue practitioners from selling Gupta-owned Optimum and Koornfontein mines.
He also wants to stop them from selling any of Tegeta’s assets.
Al-Zarooni, a businessman from Dubai with links to the Gupta family, is arguing that a sale of shares agreement he concluded in August 2017 to purchase Tegeta Resources and Energy for R2.97bn is still in effect.
The business rescue practitioners cancelled the agreement in April this year, after it emerged that Al-Zarooni had not paid the full deposit as outlined in the agreement. Al-Zarooni is refusing to accept the cancellation, saying that any dispute must be determined through arbitration administered by the Arbitration Foundation of South Africa.
According to the court papers, Tegeta was paid a deposit of R64m in October 2017 - R2.3m short of the full amount identified in the sale of shares agreement.
Al-Zarooni argues that he tried to pay the remaining R2.3m but the payment was returned to Charles King SA’s bank account – for reasons unknown to him.
"It is instructive that Tegeta’s then-directors waived the payment of the balance within the deadline and in this regard…it was verbally agreed between the respective parties that the shortfall of R2.3m would be paid as part of the final balance upon the transfer of the shareholdings," Al-Zarooni’s founding affidavit reads.
"In these circumstances, Charles King was not in breach of the agreement and Tegeta had no right to cancel the agreement."
Under the spotlight
News24 understands that the R64m transaction is being investigated by the SA Reserve Bank for possible violations of exchange control regulations.
Correspondence attached to the court papers shows that attorney for the business rescue practitioners Bouwer van Niekerk has repeatedly asked for the documents relating to SARB approvals, which Charles King SA and their attorneys have refused to provide. Tegeta owns Optimum and Koornfontein mines as well as Optimum Coal Terminal (OCT) – a company that holds lucrative export concessions at the Richards Bay Coal Terminal (RBCT).
Al-Zarooni has asked the Pretoria High Court to interdict any sale of the mines as envisaged in business rescue plans arguing he has a valid purchase agreement for 100% of Tegeta’s shares in the three Gupta mining companies. Tegeta is also under business rescue.
This is not the first time Charles King SA is litigating against the business rescue practitioners. They first approached the court to interdict a creditors meeting that sought to discuss and vote on the business rescue plan, demanding that Tegeta recognise it as a creditor as a result of the R64m payment.
The business rescue practitioners consented to the order and News24 understands it plans to return the R64m to Charles King SA when the mines have been sold.
Smoke and mirrors
Business rescue practitioner Louis Klopper told Times Select in May that at the time of the payment, Tegeta was experiencing a "liquidity crisis".
"The bank account shows they [Tegeta] had a cash flow problem at that stage and they needed R64m to pay their salaries," the publication quoted Klopper as saying.
Another business rescue practitioner, Kurt Knoop, filed an answering affidavit on Tuesday, in which he argues that Charles King had known for months that they considered the share of sales agreement cancelled, and thus the application failed to establish grounds for urgency.
"The dispute between the parties has been ongoing since April 2018, some five months ago. This application, on an urgent basis, is an abuse of proceedings and the rules of this Honorable Court," Knoop’s affidavit reads.
But it appears Charles King and Al-Zarooni missed another crucial deadline.
"The agreement contains seven suspensive conditions that had to be fulfilled by August 31, 2018," Knoop explains.
This includes a resolution of the Charles King board approving the purchase of Tegeta, approval from the Competition Commission, consent of the sale from the Minister of Mineral Resources in terms of Section 11 of the Mineral and Petroleum Resources Development Act, approval from the RBCT Company that OCT may be sold, consent from Eskom for the sale, the provision of a Black Economic Empowerment partner that would acquire 30% of the shareholding.
"There is no dispute that the suspensive conditions were not timeously fulfilled or waived in the manner prescribed," Knoop adds. "As none of the conditions was fulfilled by 31 August 2018, the agreement is of no force of effect and the applicant [Charles King SA] does not have any claim against [Tegeta]."
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