Sea Kay to fight back

Pretoria - A government agency is attempting to liquidate the beleaguered home-builder, Sea Kay [JSE:SKY], while government itself owes the company millions.

Sea Kay, whose shares are listed on the main board of the JSE, will oppose the application for liquidation.

On Friday, shortly after the news was announced, the company's share price fell 27% to 16c, dropping down to 12c before recovering to 23c before the close. Over the past year it has shed more than 74% in value.

Sake24 previously announced that Sea Kay had summoned the government for R144m in arrears for the N2Gateway project outside Cape Town, and that the Gauteng Department of Housing owed it more than R100m.

In December Sea Kay's auditors said that the group's continued existence as a viable enterprise was under threat.

On Friday the company announced that the National Housing Finance Corporation (NHFC) had submitted the application for liquidation in respect of a R128m loan, R108m of which was outstanding and R56m already paid.

The claim includes interest.

The NHFC is the finance arm of the national Department of Human Settlements, which supplies bridging finance to home-building companies in an effort to speed up housing provision for the poor. Sea Kay's directors say that, according to advice obtained, the NHFC's application is factually and from a legal standpoint replete with errors and they reckon they can successfully contest it.

Sea Kay is moreover considering a counter-claim for what it regards as a breach of the loan agreement by the NHFC.

The home-builder is also piqued because the NHFC had the liquidation application delivered to the Gauteng Department of Housing without its knowledge. This department is one of Sea Kay's major debtors, but the two bodies are trying to co-operate to resolve outstanding issues.

Sea Kay says government owes it - in terms of 16 different contracts - more than the sum for which the NHFC wants to have it liquidated. It is the largest entity building houses in terms of any national department's housing programme and is busy with more than 12 000 houses to a value of R600m.

Sea Kay has previously received awards from the government for the quality of its work.

According to the company, the office of Tokyo Sexwale, the Minister of Human Settlements, was attempting to help resolve differences in interpretation of the loan agreement between the NHFC and Sea Kay, when the application for liquidation was served without any notice.

Sea Kay says it is making progress in resolving disputes over the N2Gateway project in Cape Town, and is working together with the Gauteng Department of Housing to expedite payments.

- Sake24.com

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