Last Updated 05/03/2010
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Valley View Sterkspruit Properties (Pty) Ltd
previously
Copper Sunset Trading 201(Pty) Ltd
(Under Judicial Management)
Masters Ref: T7752/09
Documents on File:
1. Notice of Motion
2. Court Order
The provisional judicial managers couldn’t provide information on the company during the previous reporting dates mainly due to insufficient information available. The company’s account records, financial statements and all other documents were unobtainable. A preliminary report is hereby given with the limited information at our disposal.
PRELIMINARY REPORT ON VALLEY VIEW STERKSPRUIT PROPERTIES LIMITED
1. The current account is held with FNB under acc number 62114379937 and is showing a debit balance of R 1 171.70. The Nedbank account is held under account number 901-591-7911 and has a credit balance of R 1 438.69 as on the 1st of March 2010.
2. No development is so far undertaken on this property.
3. Total Immediate Obligations of the company : Undeterminable at this stage
THE COMPANY
The company was incorporated on 12 April 2006 as Copper Sunset Trading 201 Limited under reference number 2006/011283/06. Hennie Lamprecht, Paul de Waal and Izak van Niekerk are given as the directors of the Company whilst Christo Singleton acts as Company Secretary.
The company sole asset is Portion 214 of the Farm Sterkspruit 33, situated on the outskirts of Lydenburg which it acquired in May 2007 from Roebus Beleggings (Pty) Ltd at a cost of R 33 000 000.
The disclosure document stated that Roebus is a subsidiary company of Nelesco 136 (Proprietary) Limited, which acquired the shares in Roebus in September 2004 for R 5,4 million (para 12.6 pg 14 of the Disclosure Document). From the review of the company books of Nelesco from 1 March 2005, the investment in Roebus does not appear to be reflected.
The Sterkspruit property was valued by G.R. Miller in August 2008 for R 29 400 000 and by M.D. De Klerk in July 2008 for R 30 470 000. At the time of valuation, the property constituted 21,761 ha of unserviced agricultural land although the town planning application for re-zoning had been approved.
In November 2008, the property (as is) was syndicated by Bluezone in an attempt to raise R 100,5 million for the payment of the land to Roebus Beleggings (Pty) Ltd and further development of the property into a residential township.
THE SCOPE OF WORK UNDERTAKEN
The forensic auditors have been unable to find the books of account of Copper Sunset trading 201 Ltd (Valley View) company since inception and have relied on the following:
· the bank statements of the Company’s account with FNB since September 2006 to date, which the forensic auditors have analysed in detail;
· various invoices relating to the payments made by the Company from its FNB bank account;
· a copy of the disclosure document issued by Bluezone dated November 2008;
· the intercompany account between Bluezone and the company as reflected in the books of Bluezone; and
· a summary from Honey & Partners prepared in September 2009 reflecting amounts received and disbursed in respect of the Valley View placement.
The forensic auditors consider the above to be sufficient to form an initial opinion on the transaction.
THE PROPERTY SYNDICATION
The following terms of the Valley View disclosure document are relevant:
· the property was transferred from Roebus to the company without any portion of the purchase price having been paid (sale of land agreement read with the addendum dated 11 November 2008
pg 27 – 42 of disclosure document);
· between the first sale agreement and the addendum, the company passed a surety bond over its property in support of a R 22,3 million loan which Nedbank had extended to the HCL Family Trust (para 12.2.4 pg 13);
· the offer was made subject to a minimum subscription of R 35,2 million (para 22 page 16), failing which (other than for 10%) the funds were to be retained by Honey & Partners for the benefit of investors (para 20 & 31); and
· the addendum (which provided for a portion of the purchase price of R 33,0 million to be used to redeem the Nedbank bond) was made subject to the minimum subscription being received by 30 April 2009 (para 5 page 41); and
· both Hennie Lamprecht and Durant van Zyl had an indirect financial interest in Roebus (through Nelesco 136).
The forensic auditors have formed an initial view that the minimum subscription of R 35,2 million was
NOT ACHIEVED as:
· from an analysis of the bank statements and the Honey & Partners reconciliation, an amount
of R 33,75 million has been accounted for;
· the list of investments received (as maintained by Izak Butler of Bluezone) reflects R 33,25 million
(at this stage, the difference is not material to our opinion); and
· Honey & Partners reconciliation dated September 2009 also reflects investments of R 33,75
million, and
· there is no evidence that any shares were issued to Roebus as part payment for the property
or that any funds were received or any shares issued to any connected party.
No further amounts were received by Valley View after August 2009. It is possible (but not probable) that further amounts were received by Honey & Partners between September 2009 and 31 October 2009 (the 2nd closing date).
What is of interest is that Honey & Partners confirmed by e mail dated 25 May 2009 (Annexure “B”)
that the minimum subscription had been received, yet its later e- mail of 9 September (Annexure “C”) enclosing the reconciliation of investments received reflects only R 33,75 million.
It has been established that the R 33,75 million received by Honey & Partners was applied as follows:
Payment of a guarantee (presumably to Nedbank) 18 000 000
Fees to Honey & Partners 267 000
Transferred to Valley View Bank Account 15 483 000 33 750 000
If we are correct in our view that the minimum subscription was not received, then the addendum to the sale agreement fails. Valley View would then, in the forensic auditors’ opinion, have a claim against the
HCL Trust for repayment of the R 18,0 million.
The forensic auditors’ analysis reveals that no amounts appear to have been paid to Roebus for the property, but an amount of R 11,45 million to Nelesco 136. In the absence of any authority to the contrary, payment
to Nelesco would not constitute payment to Roebus. We are therefore of the view that Valley View may
well have a claim against Nelesco for repayment of the amount received from Valley View.
We have combined the bank statement analysis with other source documents to ascertain the financial position of Valley View as at 30 November 2009.The statement reflects:
· a carrying value of the property of R 34,8 million. This is likely to be far in excess of the fair value of the property, which would bring the methodology utilised in the valuations into question;
· a potential claim against Nelesco 136 of R 11,45 million;
· a potential claim against the HCL Trust of R 17,76 million, and
· a potential VAT claim of R 4,62 million.
CONCLUSION
The forensic auditors have concluded that there is no purpose in continuing with the Judicial Management of this company. It is therefore recommend that the Judicial Managers consider:
· placing the Company under liquidation without further delay; and
· holding an enquiry under Sec 417 and Sec 418 of the Companies Act whereby the liquidators can subpoena both the directors and Honey & Partners to provide both evidence and documentation to investigate the matters raised in this report in further detail. This would also allow the liquidators to confirm the receipt of the funds as outlined in the analysis and assist with the recovery of these amounts.
It is the forensic auditors’opinion that there may well be a case against the Directors, and possibly Honey & Partners. This aspect should be discussed with the attorneys.
The forensic auditors stress that this is purely a preliminary report based on the information at their disposal.
It is of importance to notice that Nelesco 136 (Proprietary) Limited has been liquidated on the 9th of February 2010 and that the following liquidators have been appointed: PD Kruger, EL Bester, P Bermann and NA Matlala. The judicial managers are actively pursuing all avenues to recovery monies for the investors.
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