Lawyers in the money
SOME DEALS IN THE SERIES of oftencontroversial transactions that netted investment and gaming company Hosken Consolidated Investments (HCI) an effective 74,7% interest in gaming and hotel company Tsogo Investment Holdings (TIH) are still under threat of falling through. HCI’s 2008 annual report reveals a series of possible court cases in which it’s still locked in battles for control of the black empowered gaming company with Nafcoc Investment Holding Company (Nafcoc).
The first case involves Nafcoc making an application to the High Court to reverse a deal whereby HCI wholly owned subsidiary Tangney Investments acquired 4,4% of TIH from African Renaissance Holdings. As far as Nafcoc is concerned the transaction doesn’t comply with TIH’s articles of association and it wants the deal reversed.
“HCI has opposed the application and the application has been argued,” reads part of Nafcoc’s litigation statement. It also stated the High Court has referred the matter to oral evidence and that Nafcoc had filed papers setting out its claim. “HCI intends filing a plea to the claim in due course.”
In yet another matter, Nafcoc sent letters to TIH demanding it informed HCI that its shareholding in TIH is a breach of TIH’s shareholders’ agreements. TIH sought “independent” legal advice, which stated Nafcoc’s claim was without substance. “Should Nafcoc take the matter further the matter will be defended by the relevant HCI subsidiaries,” says HCI.
And then there’s that not so small a matter with regard to HCI’s buying 50% Fabcos Investment Holding Company (which held shares in Tsogo). Nafcoc also objected to that transaction. Approval of that deal was nevertheless received from the provincial gambling boards of Gauteng, KwaZulu-Natal and the Eastern Cape where Tsogo has operations. The Mpumalanga Gambling Board agreed with Nafcoc and also objected to the deal going ahead.
HCI has asked the High Court to review that refusal. The case is scheduled to be heard over three days in April 2009. “An adverse outcome (on these cases) may affect the fulfilment of the conditions to the FIH acquisition and/or HCI’s interests in the Tsogo Group,” says HCI. “The extent of the impact which such matters may have on the HCI Group cannot be determined at this stage.”
What’s more worrying about all this is most of the deals were concluded back in 2006. At year-end there was an existing R181m claim against FI Funding and Investments Holdco (formerly Mettle), which were classified as held for sale. The company was subsequently sold to management, which wouldn’t comment on how the liability arose, except to state the company had been sold and therefore the liability no longer existed.