IDC to sue Gupta company for R293m
State firm charges Oakbay for falsifying share price
Cash-strapped Gupta-owned Oakbay Resources & Energy’s woes have escalated with news that the Industrial Development Corporation (IDC) is suing it for its failure to meet a demand to pay R293-million yesterday.
The claim arises from the alleged unlawful manipulation of the Oakbay share price ahead of the company’s listing on the JSE in November 2014.
The allegations, investigated by the Financial Services Board, were that a Singaporean entity funded by the Gupta family bought shares in Oakbay just prior to its listing in order to boost the share price.
IDC divisional executive for transaction support and post investment Gert Gouws confirmed last night that the money had not been paid by the deadline set and that legal action would proceed.
No comment was forthcoming from Oakbay Resources, but according to reports it has no cash to pay the claim. In June it announced that its cash supply had dwindled from R225-million to R2.7-million.
Economic Development Minister Ebrahim Patel said in a statement that on the basis of legal advice the IDC board had rescinded, alternatively cancelled the loan restructuring agreement between itself, Oakbay Resources and other entities in the Oakbay group on the grounds of “various misrepresentations and breaches of warranties”, which were committed. In terms of this loan restructuring agreement, the IDC acquired shares in Oakbay Resources following its listing in late 2014.
The IDC has tendered the return of its shares in Oakbay Resources and demanded repayment of the outstanding capital and interest due to it – totalling about R293-million.
The IDC agreed in 2010 to lend the Oakbay group R250million at a real after-tax internal rate of return of 10%. Oakbay used the money to buy the Shiva Uranium mine.
When Oakbay listed on the JSE, the IDC’s interest claim, which at that stage was about R256-million, was converted into equity in Oakbay Resources (3.56%) at the listing price of R10 per share less a 10% discount.