IDC: No prejudice in Oakbay delisting

Johannesburg - The Industrial Development Corporation (IDC) says it expects the Gupta-owned Oakbay Resources & Energy to permanently delist from the JSE in a way that does not “prejudice” it.

At stake is the development funder’s 3.6% share in the ill-fated company, which has little realistic prospect of staying on the JSE after “temporarily” suspending its shares last month.

“Oakbay has indicated that, due to increased negative public opinion about the company, it is highly unlikely that it will be able to secure the services required by a JSE-listed company,” the IDC told City Press in an emailed response to questions.

“The IDC’s expectation is that the process of delisting will be carried out in accordance with the law and with due regard to the rights of all minority shareholders, including the IDC.

“We will continue to engage with the company with a view to ensure that the IDC is not prejudiced.”

The IDC lent Oakbay R250m in 2010 and the repayment date was 2013.

This was, however, renegotiated and the final settlement due date was changed to next year.

As part of that restructuring, the IDC agreed to convert all the interest that had accrued – more than R225m at the time – into Oakbay shares.

Over its time on the JSE, only a small amount of Oakbay shares changed hands, and the company’s value shot up and down on the basis of inconsequential transactions.

Asked what value the IDC now gave these shares, the funder only responded that they were valued in line with how all IDC shares were valued – with reference to the market value.

This illiquidity made the value the IDC has formally ascribed to them questionable, but now these shares are not even hypothetically tradable.

Even at their nominal value when they were suspended, the IDC’s shares had fallen in value by 25% to R167m.

The suspension of Oakbay’s shares followed the company yet again being abandoned by its required service providers – a JSE company sponsor, River Group, and share transfer secretary Tiberium Financial Services.

Almost a year earlier, Oakbay’s previous sponsor and transfer secretary also jumped ship – shortly after most South African banks refused to do any further business with Gupta companies.

The debt that was converted into shares was only the accrued interest on the original R250m loan. The rest of the loan and subsequent interest are still being paid to the IDC.

A total of R37.5m was due last week, with another R37.5m due at the end of March
next year.

After that, Oakbay still has to repay the capitalised interest that has been piling up. This was about R44m at the end of February, according to Oakbay’s financial statements.