Concern over repayment of IDC loan by Guptas

ALARMS should have sounded when the Guptas approached the Industrial Development Corporation (IDC) for a R250-million loan to buy their unprofitable Shiva Uranium mine.

The IDC should have asked even more questions when, after giving notice in 2013 for the loan to be repaid, the Guptas, through their Oakbay Resources and Energy (ORE), which bought the mine, asked to renegotiate the loan, which had ballooned to R452-million with interest, and repayment terms.

The renegotiations saw the IDC grant ORE a quasi-equity loan, for which they received 3.56% shares in the company.

Now, with the Guptas disposing of their assets, questions are being asked about whether they will, especially with the closing of their bank accounts and with only R2.7-million available to them in cash, be able to make the final repayment of R37.5million by March 2018. In June, ORE announced its cash supply had dwindled from R225-million to R2.7-million. ORE and Shiva failed to respond to questions.

In 2016, the IDC lost R90-million when ORE delisted from the JSE, and was left with shares it could not sell.

Financial analysts believe hard questions should have be asked long before the IDC granted the loan, especially around assurances on repayments.

Professor Kalu Ojah, Wits Business School deputy director, said such loans were not often granted, especially as such requests were signs that businesses applying for these loans were in financial trouble.

IDC spokesman Mandla Mpangase said: “Obviously it [the de-listing] is a problem for us.” He said there was nothing suspicious about the loan’s restructuring, and that ORE had so far honoured the loan’s terms and had not defaulted.

Mpangase said if the Guptas could not repay the loan because their bank accounts were closed the IDC had “a remedy”.