Four days before selling their TV channel and newspaper to Mzwanele Manyi, the Guptas received an offer to purchase their media empire for R600m.
The consortium wishing to buy the Guptas’ Infinity Media, under which their media interests fall, were ready to give them 70% of the asking price in cash and the remaining 30% in shares, which the Guptas had asked to be allocated to their employees and members of the public in an empowerment scheme.
But, instead, the Guptas chose to hand their interests to Manyi in a vendor financing deal, by which Manyi has to repay them on terms that he has said are “acceptable”.
This raises questions about the purpose of the sale of TV news channel ANN7 and newspaper The New Age to Manyi, a former head of government communications, in a deal whereby the Guptas had to finance the sale themselves, and which they preferred to the R600m they were offered.
Pretoria businessman Nazeer Noormohamed, a member of Southern Star Mega Investors Group Limited, a consortium created for the purpose of effecting the R600m transaction, said they got the shock of their lives when the Guptas’ deal with Manyi was announced on August 21.
Details of the transaction are contained in an unsigned offer to purchase agreement, dated August 18, made to the Guptas by Southern Star Mega.
The haste with which the deal was put together is evident in the document, which reveals that Southern Star was still being registered.
The offer, a copy of which City Press has obtained, states that Southern Star would deposit the money into the account of an “escrow agent [a person or entity that holds the assets in trust while a transaction is finalised] to hold for a period of 90 days”, after which due diligence procedures and re-employment arrangements for staff would be conducted, and while Infinity’s net asset value would be determined.
Noormohamed confirmed the details of the leaked offer this week, saying he and his partners, who he declined to name, had “secured international funding to acquire the assets with a condition of local ownership”.
“We were just waiting for the acceptance of the offer letter, which would have been followed by other processes ... We were shocked when we heard the announcement that they sold it to [Manyi’s company] Lodidox for R450m,” he said.
Noormohamed, a former ANC councillor in Tshwane, owns DStv channel Glow TV, several community newspapers, and a number of commercial and residential properties in Pretoria.
He said the offer followed a meeting on August 15, when he and his partners were taken on a tour of the ANN7 studios by one of the channel’s political analysts, Tshepo Kgadima.
“Kgadima told us that the Guptas would not settle for anything less than R600m, which we had offered,” he said.
But an angry Kgadima denied having taken Noormohamed and his partners on a tour.
“Why are these people now coming to you? I categorically deny having facilitated a sale or meeting with the prospective buyers.”
Asked if Infinity’s asking price was too steep after media reports stated that its value was R50m at most, Noormohamed said: “Several conditions, such as due diligence and the valuation, were still due to take place before the deal could be closed.”
Asked to comment on Friday, Manyi said he found any suggestion that he was fronting for the Gupta family “quite insulting, and it smacks of a sustained City Press strategy to discredit me and this deal, particularly following the unprecedented press briefing disclosure that I did where City Press was present to inspect the documentation that debunked the misguided and malicious notion of fronting”.
Manyi added that the questions put to him were: “Interesting. I have seen media reports purporting that I overpaid and that this business was actually worth R50m.
"Now you are saying that, in fact, the right value is R600m – which, in your view, means [I] am fronting for buying it for R450m.
“So, basically, you people have a problem either way. I get it on ‘inflated price’, you complain. I get it on ‘undervalued price’, you still complain. What the hell do you people want?”
Neither Gupta family spokesperson Gary Naidoo nor Atul Gupta responded to calls and SMS messages seeking comment.
The family’s lawyer, Gert van der Merwe, said he only commented on their legal affairs.