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Johannesburg - Sea Kay, a holding company within the civil engineering and construction sector, said on Friday that
the National Housing Finance Corporation (NHFC) has served applications for liquidation on both Sea Kay and Sea Kay Engineering Services, a wholly-owned subsidiary of the group.
Both applications relate to the loan agreement between the NHFC and Sea Kay Engineering. This resulted in a R128m loan by the NHFC to Sea Kay Engineering, which currently has an outstanding balance of R108m and for which obligation Sea Kay signed surety.
To date Sea Kay has repaid R56m, including interest, on the loan, the group said.
The NHFC is a housing financing arm of the department of human settlements. The government organisation provides funding to companies such as Sea Kay to deliver on government housing contracts. It is mandated specifically to improve housing delivery according to the government's housing policy, through the provision of bridging finance.
"The board has decided that the action will be defended by the company and the relevant notice will be filed at the High Court of Johannesburg in due course.
"The directors have received legal advice that the actions instituted by the NHFC are factually and legally flawed and that the company has a reasonable prospect of successfully defending both applications," Sea Kay said.
The group said its legal team has advised a counterclaim against the NHFC for a breach of the provisions of the loan agreement of which Sea Kay notified the NHFC during 2009, but for which Sea Kay never received any response.
The NHFC also delivered a copy of both applications to the offices of the Gauteng department of housing without the consent or knowledge of Sea Kay, it said.
"The board wishes to advise shareholders that government, through the 16 contracts concluded with Sea Kay, owes the company more than the alleged NHFC liability.
"The directors wish to state categorically that Sea Kay's expressed intentions to continue and improve on the partnership with government in order to ensure effective, efficient, speedy and quality low-cost housing delivery in the country, still remains a top priority of the company," Sea Kay said.
"The board is positive that these matters can be resolved, which will allow Sea Kay to continue to deliver on all its housing contracts and projects," it concluded.
- I-Net Bridge