Sale of Gupta-linked Optimum thwarted as court grants preservation order

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The Optimum mine.
The Optimum mine.
Bloomberg

The North Gauteng High Court in Pretoria has granted the National Prosecuting Authority's (NPA) request for a preservation order over the Optimum Coal Mine and Terminal, scuppering the sale of the mine to a former Gupta associate.

In an order handed down by the court on Wednesday, the court issued a preservation order over Optimum in terms of the Prevention of Organised Crime Act (POCA) and has appointed a curator to oversee the property.

Importantly, the order prevents Optimum from being sold as part of a sales deal that was almost concluded.

The mine has found itself at the centre of state capture allegations after it was acquired by the notorious Gupta brothers, with the help of Eskom, in 2015.

Optimum was put into business rescue over four years ago, along with several other Gupta-linked entities.

In terms of the rescue plan, the mine was to be sold to Templar Capital's Liberty Coal, which is owned by Daniel McGowan, a former Gupta associate who had acquired the lion's share of creditor claims against the mine and who has distanced himself from the unlawful activities of the Guptas.

Late last year the National Director of Public Prosecutions (NDPP) approached the court for the preservation order on the basis that the property in question was acquired through the proceeds of crime and was also the instrumentality of crime as it was used to launder ill-gotten funds.

The NDPP further argued that the creditors' claims which underpin the agreement to sell Optimum to Templar were also linked to unlawful activity. 

The business rescue practitioners had told the court the preservation would scupper rescue of the mine – which requires it be sold, with Liberty being the only credible buyer to come forward –  and its failure would surely result in unfavourable outcomes for the mine's stakeholders and creditors, which include Optimum employees.

The National Union of Mineworkers also argued that a preservation order would deprive the employees of their vested rights.

The rescue practitioners further argued POCA was in conflict with the Companies Act, and that the Companies Act took precedent in this case.

The preservation order pertains to all the shares held in Optimum Coal Mine, the business of Optimum Coal Mine as defined in the business rescue plan, as well as all the shares held in the Optimum Coal Terminal.

Where necessary, the order grants the South African Police Service the authority to seize the property and place it in the custody of the curator.

The court order limits the business rescue practitioners' ability to make any sizeable transactions pertaining to Optimum and requires they work with the curator as he works to value the business and to find a buyer for the business.

Should the rescue practitioners resign or be removed, the curator has the power to replace them.

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