Cape Town - The Industrial Development Corporation (IDC) has “jumped from the frying pan into the fire with a questionable restructuring deal” with Gupta-owned Oakbay, Democratic Alliance MP Michael Cardo said on Tuesday.
He was responding to Economic Development Minister Ebrahim Patel’s Parliamentary written reply regarding a loan restructure deal with Gupta-owned Oakbay Resources & Energy.
READ: IDC met with Atul Gupta, but never at Saxonwold - CEO
In his reply, Patel forwarded IDC CEO Geoffrey Qhena’s response, who said “there were no political considerations associated with the restructure (and) the restructuring was done purely on commercial terms …”
However, Cardo told Fin24: “I find it hard to believe the IDC’s claims.
“The IDC’s original R250m loan accounted for almost the entire R270m price which Oakbay paid for Shiva. When the mine was then parcelled out, a company part-owned by President Jacob Zuma’s son, Duduzane, took 26%, with the Guptas holding the rest.
“The fact that Oakbay failed to repay the loan with interest by April 2013 should have led any right-minded commercial lender — acting without fear or favour — to foreclose.
“Instead, the IDC bent over backwards to restructure the loan on terms favourable to Oakbay.
“It makes very little sense... The IDC seems to have jumped from the frying pan into the fire with a questionable restructuring deal,” he told Fin24.
Cardo had asked Patel what political and commercial considerations led the IDC to strike a restructuring deal with Oakbay at a reduced interest rate of prime plus 2%, given that the specified company defaulted on its first R250m loan to the IDC.
Qhena responded, saying the original R250m loan is expected to be fully repaid, “as R137.5m has already been received to date and R112.5m is outstanding as at April 30 2016”.
“The next instalment of R37.5m is payable by the end of June 2016, with intention of the full capital being repaid by March 31 2018.
“The interest of R257m being from April 14 2010 to May 31 2014 (the date on which the amount converted was determined) was converted into shares when the entity was listed (at a 10% discount to the listing price).
“The additional interest (after conversion) of prime plus 2% will be repaid as a lump sum on March 31 2018.”