Hudaco acts to recoup huge loss

JSE-listed industrial group Hudaco has taken legal action against its advisers on an empowerment transaction to recover hundreds of millions of rand it claims to have lost through intentional misrepresentation.

It is also claiming there has been negligence on the part of Bravura Equity Services and Cadiz Asset Management.

Hudaco said on Tuesday it aimed to recoup R180million in “alleged secret profits” and a further R312million paid to the SARS as a penalty.

The dispute revolves around the financing of Hudaco’s 2007 BEE transaction.

At the time of the deal‚ Hudaco Trading bought most of the operating businesses from the old Hudaco group and funded the BEE purchase through the issue of a R2.2-billion subordinated debenture held by a unit in the Morgan Stanley group.

The proceeds were placed in a ring-fenced subsidiary‚ Barbara Road Invest and invested in preference shares in a company in the Cadiz group.

Hudaco said it was told the money invested by Barbara Road Investments with Cadiz would be used to buy South African government bonds. But‚ to its “great surprise” SARS informed it in November 2012 it had uncovered a “highly elaborate web of arrangements established by Bravura-related entities‚ individuals related to Bravura Equity Services and its associates”.

Bravura rejected the allegations as “inaccurate‚ groundless and without merit”. — BDLive