Afristrat to liquidate
APPLICATION: COMPANY ‘COMMERCIALLY INSOLVENT, UNABLE TO PAY DEBTS’ This will be a bitter pill for investors to swallow after they invested R2.3bn.
The board of Afristrat Investment Holdings, the suspended JSE-listed company in which investors invested R2.3 billion in preference shares, has taken a decision to liquidate the company because it is commercially insolvent.
Afristrat’s board took the decision on 1 March, just days after Judge Gregory Ally in the High Court in Pretoria on 20 February dismissed with costs an urgent application by single minority shareholder Jienie-Michelle Dreyer to provisionally liquidate Afristrat.
It also follows Moneyweb confirming last week that Change The Conversation Digital, a former client of Afristrat, would be re-enrolling an application to liquidate Afristrat because of the R433 000 it claims is due, owing and payable to it by the company.
Afristrat, which was previously known as Ecsponent, published a last week in which it advised holders of shares in the company that on 1 March, its board decided that the company:
Is unable to pay its debts
Is not meeting the solvency and liquidity test as set forth in Section 4 of the Companies Act, 2008 (Act 71 of 2008), as amended, and therefore it will be just and equitable to wind up the company; and
It must proceed with a liquidation application in terms of Section 344(f) and/or 344(h) of the Companies Act, 1973, as the company is commercially insolvent.
Afristrat advised shareholders in a previous Sens accouchement published on 27 February that:
The company had been unable to make additional progress with its restructuring initiatives process due to its suspension and Dreyer’s liquidation application;
The going concern assessment performed by the board indicated that the group is unable to continue as a going concern; and
The placing of the group under business rescue is not possible.
Afristrat added that the conclusions reached by its board on the going concern assessment were unaffected by the judgment and dismissal of Dreyer’s liquidation application.
The restructuring initiatives process mentioned by Afristrat included an offer to holders of securities, which was expected to resume once the JSE suspension had been lifted and the judgment on Dreyer’s liquidation application had been delivered.
Attempts to obtain further comment from Afristrat CEO
George Manyere on Thursday were unsuccessful.
Board decision questioned
Dreyer on Thursday questioned how Afristrat’s board decided to liquidate the company when it has not had audited financial results for the past two or three years.
Afristrat last published audited financial results for the year to end-March 2021.
The JSE decided to suspend all trading in the shares of Afristrat effective from 5 August, 2022 because the company had failed to publish its audited financial statements for the year to end-March 2022 within the four months following its year-end, as stipulated in the JSE’s Listings Requirements.
No external auditors
Afristrat announced the resignation of its external auditors, Nexia SAB&T, with immediate effect on 12 August, 2022 and, to date, has failed to appoint new external auditors.
In terms of the Companies Act, a company has 40 days to appoint a new auditor, which means Afristrat should have appointed new auditors by 21 September 2022.
Dreyer confirmed on Thursday that she will definitely be applying for leave to appeal the dismissal of her application to liquidate Afristrat.
“The papers are ready and will be lodged tomorrow [Friday] or something,” she said.
Dryer was unsure whether she and 119 other investors in Afristrat who supported her application to liquidate the company would be seeking to intervene in Afristrat’s own application to liquidate the company.
Attempts to obtain comment from Change The Conversation Digital on Thursday on whether it will still be proceeding with its application to liquidate Afristrat following the announcement that Afristrat will be launching its own application and its possible intervention in this application were unsuccessful.