BBC fuming over Aveng’s alleged lies

The Black Business Council (BBC) is fuming over alleged misrepresentation of facts by listed company Aveng in one of its recent public announcements in which it claimed a transaction with a BEE partner fell apart because of failure to raise R20 million.

BBC secretary-general George Sebulela said the organisation was unimpressed by Aveng’s announcement, which indicated that the Kutana Group had failed to fulfil a funding requirement of the transaction.

“Kutana Group has refuted the contents of the statement published by Aveng, which therefore means that misleading information must have been communicated to the board and shareholders, since the transaction, as told to us previously, had been approved by the Aveng board and shareholders.

“That cannot be acceptable for a JSE-listed company as per the ethical rules of a listed company,” Sebulela said.

Sebulela said the BBC, which was a negotiating party in the transaction, was not informed by Aveng before the release of its statement.

“Sadly, it is clear that the reputation and integrity of the 100% black women-owned company Kutana Group and its individual professional leaders have been badly tarnished by the untrue contents of the Aveng Sens announcement.

“It would therefore be appropriate for Aveng to urgently engage the BBC to discuss this matter,”
he said.

The Aveng and Kutana Group transaction would have resulted in Kutana receiving a 51% stake in Aveng, bringing with it cash and technical expertise.

In the announcement released last month, Aveng said Kutana failed to enter into the necessary funding arrangements to obtain an upfront payment of R20 million before the agreed date and as such the deal was terminated.

“The funding condition was not fulfilled prior to the fulfilment date. As a result of this, the agreement with Kutana Construction has terminated,” Aveng said.

In response Kutana Group denied that the money was not raised, saying it had proved this to Aveng.

Kutana said the difficulties encountered in closing the deal related to the unexpected underperformance of Grinaker-LTA, Aveng’s largest subsidiary.

CEO of Kutana Thoko Mokgosi-Mwantembe said the strategic review announced by Aveng last September has also raised significant concerns for Tukana given the uncertainty regarding Aveng’s commitment to Grinaker-LTA.

“While Kutana is in a position to meet its financial commitment in terms of the purchase agreement, which in fact was demonstrated to Aveng, the significant deterioration in Grinaker-LTA’s financial performance since signing the deal, and the uncertainties surrounding Aveng’s ongoing strategic review are a great concern to myself, our investment committee and our board,” she said.

Mokgosi-Mwantembe said to ensure the investment and financial contribution would yield the projected return and desired effect, the concerns were raised with Aveng and discussions were ongoing.

“The unconditional release of such funds in light of the material changes affecting the business unit and its parent could not have been undertaken without Tukana having secured greater certainty from Aveng regarding these material changes and the effect on the long-term sustainability of the overall transaction,” Mokgosi-Mwantembe said.

She said her company’s impressive track record of acquisitions in the past nine years had been because of its investment in companies that were able to deliver on their projections.

“To this end, we wish Aveng and Grinaker-LTA every success ahead.”

The JSE’s director of issuer regulation John Burke said the exchange could not act until an official complaint had been laid. By Thursday nothing had been received.

“Should a listed company be accused of not telling the truth in a Sens announcement then the JSE requires it to lodge an official complaint which the JSE will investigate.

“Until such time, we cannot speculate on allegations. As we stand at the moment, there has been no such complaint lodged with the JSE,” Burke said.

“There is nothing further to add to this statement and we can confirm that we have not had any communication from the JSE in relation to this announcement and nor do we expect to receive any,” Aveng said in a brief response to questions sent on the issue.