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http://www.mondaq.com/southafrica/x/278364/Corporate+Commercial+Law/Can+a+business+rescue+practitioner+issue+shares South Africa: Can A Business Rescue Practitioner Issue Shares? Few extracts below... It must be remembered that in terms of the Companies Act, shareholders are included in the definition of an "affected person" and therefore have the right to be notified of important and relevant events and to participate in court proceedings and business rescue proceedings as allowed by section 146. The duty of the business rescue practitioner is to prepare a business rescue plan for consideration by affected persons and possible adoption at a meeting convened in terms of section 150(1) of the Act. At such meeting the business rescue practitioner must introduce the plan for consideration by creditors and, if applicable, by the shareholders. The practitioner must invite discussion on the plan and conduct a vote on the plan. If voting on the plan takes place and the plan is supported by more than 75% in value of all creditors who voted, and at least 50% in value of independent creditors who voted, and no rights of shareholders of any class were altered, than the plan is regarded as finally adopted. If the plan provides for the issue of any authorised shares of the company, the practitioner may determine the consideration for these shares and in accordance with the plan, issue any authorised securities of the company, in terms of section 152(6)(a) of the Act. It must be remembered that section 140(1)(a) confers upon the business rescue practitioner full management control of the company in substitution for the board and pre-existing management during the company's business rescue proceedings. In terms of section 140(3)(b), the business rescue practitioner also has the responsibilities, duties and liabilities of a director of the company, as set out in section 75 to 77 of the Act. Accordingly the business rescue practitioner assumes full management control and the total control of the board of directors. This will in itself allow him to issue the relevant authorised but unissued shares to the investor and he would not need the consent or cooperation of the board of directors to do so. The business rescue plan will still nonetheless have to be passed on a majority of more than 75% of the voting interest, of which 50% will have to be independent creditors as envisaged in terms of section 152(2) of the Act. Accordingly it is only the creditors who will, in terms of section 145 of the Act, be entitled to vote in respect of the issuing of the shares, which issuing of shares will have to be canvassed in the business rescue plan. P.S....some very interesting points above....Thoughts welcome.
Mr P, not my field so unable to add constructively, but thanks for your (& others) work. The frustration remains that, without response from BRP, shareholders are seemingly out in the cold with only hopium...
Well shareholders have not been kept in the loop. This looks suspiciously like someone is picking up the pieces for peanuts?
I'm inclined to agree. There doesn't appear on the face of it to have been sufficient effort (or desire) to get this mine back up and running. As people have said, in the grand scheme of things the money require to kickstart isn't actually that significant when compared to the amount that has been ploughed in during the earlier stages. We had the makings of a potentially very lucrative asset here and to me it stinks of something going on behind the scenes (as in another buyer / investor has pressured somebody into not restarting so they pick up the mine for cheap). Pure speculation on my part in what is a very very disappointing end. I mentally wrote this investment off some time back and so wasn't entirely surprised by the recent RNS. I'd already decided that I shall never go anywhere near AIM again and this reaffirms my thoughts. But, you live and you learn. My investments now (right or wrong) consist of 95% funds and that's the way it's going to stay for the foreseeable. As an aside I can highly recommend the Monevator blog if anybody is interested in the slowly slowly approach to investing. I'll be keeping an eye out on this until the final curtain is drawn but I wish you all well and hope that this hasn't affected people to severely. It's been a great board with some excellent posters and on the whole has been good reading with some very mature conversations (unlike the vast majority of the rest of the boards on LSE).
I would have thought the larger share holders would have got together and insisted on a RIGHTS ISSUE. The BRP has had no regard for the share holders why were they appointed?
Hello all, The original posting on this subject by misterpositive was " Can A Business Rescue Practitioner Issue Shares?" I don't know about South Africa, but in the UK the short answer is no................... I have had many years experience of this topic - many year I was a creit manager, so if you are "offered" shares by a BR then please say no. Almost certainly a scam...,. Be wary. ATB DAR-
CRB- agree with a lot of your comments and thanks for the Monevator blog tip. Of all the shares I own(ed), this was by far the most grown up and genuinely informative board I read and occasionally contributed to. I have had my fingers burnt for the 1st time with this investment and it certainly delays my retirement by a year or two! However, no use crying over spilt milk- onwards and upwards! My learnings etched into my computer desk: 1) don't invest in AIM 2) don't invest in Africa 3) don't invest in a company, however tempting it looks, that is essentially a 1-trick pony. One mine, one act of God (i.e. Flood) and a one way ticket to receivership. Very sad. GLA.
Hi Dar, That article was from South Africa jurisdiction, but I take your point. http://www.mondaq.com/southafrica/x/278364/Corporate+Commercial+Law/Can+a+business+rescue+practitioner+issue+shares Waiting for a few answers from the new BR practitioner.
Hi Mr P, Seriously, do you really think there's going to be a rescue package at this stage? Cheers
HI tozerk, I have asked the question to gauge if they have received any offers as the BRP suggested end of April. Might get an answer tomorrow, otherwise will call her. No guarantees mate, but not writing this off just yet.
Got a reply from the Practitioner, expecting offers by end of this week. Let's see what kind of offers we get (if any) as long as it's enough to enable restart of operations. I would be happy to see it through for next 24 months if normal trading resumes.
Hi Mr P, So assuming DCP get an offer they find acceptable, does that mean we continue as shareholders of the business?
CRB, wrt yr comment "There doesn't appear on the face of it to have been sufficient effort (or desire) to get this mine back up and running." IMO, there seems to be more of a desire to ensure that DCP went into administration so that someone could pick it up on the cheap with no debt. Of course, that doesn't mean the new owner will have an easy time of restarting the mine. It's fairly common in such circumstances for disgruntled former employees to fix the plant so that restart is problematical & costly. A case of ... don't get mad, get even.
they are all scumbags. PL was a former banker .... should have never trusted that guy. Where is rasmala now, the biggest scumbags. If they werent too greedy for shares, I think DCP could have just raised another million throuh them instead of this BRP (Bull**** Rescue Package). Our debt is around £28 million and the mine is worth a billion. What are the chances of it being sold for more than the debt. ZERO because we are in SA. This will be picked up for £10 to £15 million. I think the interested parties are offering peanuts and deliberately draggin this on.
So they've got a week to save it from going south. Pretty god damned tight (hats even if they are trying).
tozerk, In a word...YES...even if it's a low ball offer, DCP is not really in a position to negotiate a higher price to be honest. But all will depend on terms of the offer. I know timelines are very tight. May be DCP issued that 'notice of intention to appoint administrators' to force them to make some kind of offer, if they are genuine offers to start with. Time will tell. ATB
Thanks Mr P. Pretty risky strategy, but I guess a line needed to be drawn somewhere in the sand as it would drag on for ever, without a fixed date. We'll see.