The Mpumalanga division of the High Court on February 26 granted an interim interdict, as applied for by bidder Arqomanzi, delaying the implementation of business rescue plans for the Lily and Barbrook mines by former owner Vantage Goldfields.
The interim interdict is valid until May 4.
Both mines have been in business rescue since 2016, after a collapse at the Lily mine resulted in the deaths of still unaccounted for mineworkers Yvonne Mnisi, Pretty Nkambule and Solomon Nyirenda.
Arqomanzi, which is part-owned by minerals investment group SSC Group, was a bidder for both mines, having submitted business rescue proposals to reopen the mines about a year ago.
Meanwhile, on February 15 this year, Vantage received approval from the business rescue practitioners (BRPs) to implement its proposed business rescue plans for the reopening of both mines.
At the time, the BRPs stated that, by amending the adopted business rescue plan, they would be acting reasonably in so far as the amendment will result in the necessary funding being made available to Vantage to enable it to pay the approved creditors the amounts stated in the adopted plan.
However, Arqomanzi director Neil Herrick says his company presented plans for the redevelopment of the two mines, which were assessed by an independent third-party mining expert, to the BRPs and “had these accepted by them more than a year ago”.
He says that, in 2020, Arqomanzi had also furnished proof of sufficient funding from Hong Kong-based Alpha Capital Group for the acquisition and redevelopment of the mines.
“This, too, was accepted by the BRPs. To strengthen its position as a bidder, as well as the position of all creditors, former employees and other parties negatively affected by Vantage’s inability to settle its debts and reopen the mines, Arqomanzi settled Vantage’s outstanding debt to Standard Bank, thus becoming Vantage’s major creditor.”
Herrick alleges that what subsequently transpired, was a series of “ploys” by Vantage to stall the conclusion of Arqomanzi’s acquisition. He adds that the recent court interdict shows “unlawful indulgence of the BRPs”.
BUSINESS RESCUE SETBACK
Vantage CEO Mike McChesney says the interim interdict is a “massive setback” for both Lily’s and Barbrook’s former employees and communities. “This is the third time in two years that [SSC Group CEO] Fred Arendse and Arqomanzi have instituted legal action to frustrate and delay the business rescue process.”
In a statement released on February 27, Vantage states that it is “extremely disappointed” with the impact that the interdict has on the employees, creditors and community members who are interested persons of the companies currently subject to business rescue.
Although Vantage says the High Court has made an order “solely for the benefit of enabling employees, creditors and other interested persons to make submissions to it by May 4”, the company also points out that delays will subsequently occur because the business rescue plans will be put on hold until that date.
Further, Vantage points out that the High Court has not expressed a view on the merits of the positions of the parties, nor has it provided reasons for the decision to grant the order. “The High Court has not declared the actions of the BRPs as unlawful, nor has it criticised [Vantage’s] financing or ability to reopen Lily mine,” states Vantage.
Arqomanzi, meanwhile, says it “prefers not to comment as to why the BRPs agreed to act in such a manner”, and that the company, will “simply not” permit the BRPs to “disrespect and trample” on its rights and those of creditors and former employees.
Herrick adds that the consequence of the actions of Vantage and the BRPs resulted in “lots of costly legal action, no closure for the families of Mnisi, Nkambule and Nyirenda, continuing frustration and delays for the creditors and other affected parties, and no certainty about the future of the mines.”
Vantage states that its plans set out a “clear strategy” for the payment of creditors and the reopening of the mines. “Unfortunately, the effect of the [interdict] is that, for now, there will be a delay in implementing the Vantage plans and making payments to employees and creditors,” the company states.
Vantage adds that the BRPs had already taken steps to implement its plans prior to the interdict by making payments to certain creditors.
“There is funding available for the continued implementation of the Vantage plans and it was intended that employees and creditors would be paid imminently, which the company believes would have been “particularly beneficial to the many employees” who have now been unemployed for more than five years.