The board of Afristrat Investment Holdings, the suspended JSE-listed company in which investors invested R2.3 billion in preference shares, has taken a decision to liquidate the company because it is commercially insolvent.
Afristrat’s board took the decision on 1 March 2024, just days after Judge Gregory Ally in the High Court in Pretoria on 20 February 2024 dismissed with costs an urgent application by single minority shareholder Jienie-Michelle Dreyer to provisionally liquidate Afristrat.
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It also follows Moneyweb confirming last week that Change The Conversation Digital, a former client of Afristrat, would be re-enrolling an application to liquidate Afristrat because of the R433 000 it claims is due, owing and payable to it by the company.
Read:
Application for provisional liquidation of Afristrat dismissed
Afristrat to face a second liquidation application
Afristrat, which was previously known as Ecsponent, published a Sens statement on Wednesday in which it advised holders of shares in the company that on 1 March 2024, its board decided that the company:
- Is unable to pay its debts;
- Is not meeting the solvency and liquidity test as set forth in Section 4 of the Companies Act, 2008 (Act 71 of 2008), as amended, and therefore it will be just and equitable to wind up the company; and
- It must proceed with a liquidation application in terms of Section 344(f) and/or 344(h) of the Companies Act, 1973, as the company is commercially insolvent.
Afristrat advised shareholders in a previous Sens announcement published on 27 February 2024 that:
- The company had been unable to make additional progress with its restructuring initiatives process due to its suspension and Dreyer’s liquidation application;
- The going concern assessment performed by the board indicated that the group is unable to continue as a going concern; and
- The placing of the group under business rescue is not possible.
Afristrat added on Wednesday that the conclusions reached by its board on the going concern assessment were unaffected by the judgment and dismissal of Dreyer’s liquidation application.
Read: Afristrat admits it is unable to continue as a going concern [Jan 2024]
The restructuring initiatives process mentioned by Afristrat included an offer to holders of securities, which was expected to resume once the JSE suspension had been lifted and the judgment on Dreyer’s liquidation application had been delivered.
Attempts by Moneyweb to obtain further comment from Afristrat CEO George Manyere on Thursday were unsuccessful.
Board decision questioned
Dreyer on Thursday questioned how Afristrat’s board decided to liquidate the company when it has not had audited financial results for the past two or three years.
Afristrat last published audited financial results for the year to end-March 2021.
Read: Huh? JSE-suspended Afristrat issues a puzzling trading update
The JSE decided to suspend all trading in the shares of Afristrat effective from 5 August 2022 because the company had failed to publish its audited financial statements for the year to end-March 2022 within the four months following its year-end, as stipulated in the JSE’s Listings Requirements.
No external auditors
Afristrat announced the resignation of its external auditors, Nexia SAB&T, with immediate effect on 12 August 2022 and, to date, has failed to appoint new external auditors.
Read:
JSE suspends trading in Afristrat shares [Aug 2022]
Afristrat is contravening the Companies Act [Jun 2023]
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In terms of the Companies Act, a company has 40 days to appoint a new auditor, which means Afristrat should have appointed new auditors by 21 September 2022.
Manyere told Moneyweb in June 2023 that it was impossible for Afristrat to appoint new auditors while a minority shareholder was trying to put the company into liquidation, and the appointment of new auditors would have to wait until that process was finalised.
Investor going ahead with appeal plans
Dreyer confirmed on Thursday that she will definitely be applying for leave to appeal the dismissal of her application to liquidate Afristrat.
“The papers are ready and will be lodged tomorrow [Friday] or something,” she said.
Dryer was unsure whether she and 119 other investors in Afristrat who supported her application to liquidate the company would be seeking to intervene in Afristrat’s own application to liquidate the company.
“We will consider whether to intervene in that matter once Afristrat has lodged its liquidation application,” she said.
Attempts by Moneyweb to obtain comment from Change The Conversation Digital on Thursday on whether it will still be proceeding with its application to liquidate Afristrat following the announcement that Afristrat will be launching its own application and its possible intervention in this application were unsuccessful.
MyBucks
Afristrat disclosed in May 2022 that almost all of the R1.5 billion investment it made in MyBucks SA, the then Frankfurt-listed microlender in several southern African countries, had been lost.
MyBucks collapsed and was subsequently placed in liquidation, with Afristrat instituting a R800 million claim against it.
It is unclear what has happened with this claim.
Read:
Afristrat has ‘lost’ R1.5bn investment in MyBucks
High court bid to place Afristrat in liquidation [Oct 2022]
Afristrat to face liquidation music [Jun 2023]
