RMB Holdings’ (RMH) CEO Brian Roberts and financial director Ellen Marais, the holding company’s only two employees, yesterday did their best to allay fears among RMH shareholders that Atterbury South Africa is facing financial difficulties.
RMH, which is in the process of monetising its investments for the maximum benefit of its shareholders, disclosed in its interim results on Monday that it was in a dispute with Atterbury South Africa about the terms of a R489 million shareholder loan facility, and if the two boards can’t reach agreement, the matter may have to go to arbitration.
In a conference call yesterday, shareholders described this dispute as a “bombshell” that should have been disclosed earlier. Roberts said they had been limited by legal issues in disclosing the matter earlier.
One shareholder Chris Logan suggested that RMH’s founder, GT Ferreira, return to RMH, as RMH was involved not only in the dispute with Atterbury’s board, this despite a long business relationship and partnership with Atterbury, but there was also pending legal action with dissenting shareholders on fair value assessments by RMH.
“It is well known that when a company is in trouble, you could bring back the founders. For example, Steve Jobs went back to Apple when it was on the ropes,” Logan said in a later interview. Logan said Ferreira was known as a “good dealmaker” and would bring the necessary “tone and culture” to RMH.
Roberts had responded by saying the founding directors had “moved on,” but Ferreira was a shareholder and RMH would “reach out” to see if there was an interest.
Another shareholder on the call said there were already rumours in the market that Atterbury South Africa was in financial difficulties, and the dispute with RMH, with Atterbury now wishing to utilise an option to convert the loan facility into equity rather than repay it in cash by July 8, 2023 due date, deepened fear that Atterbury South Africa was in financial difficulties.
Roberts said in a worst case scenario, if RMH for instance lost the arbitration proceedings in the dispute, RMH would be left holding a 43% share of Atterbury South Africa, in today’s values - the stake might be different in terms of values on July 8, 2023.
He said this might delay RMH’s monetisation strategy, because prior to the dispute, RMH had always believed it would be repaid in cash for the loan guarantee, either for example in the form of dividends, or as part of some corporate deal.
He said Atterbury South Africa was doing its property developments and typically operated at quite a high level of gearing, but if there were any financial problems at it about meeting its financial covenants or the terms of any other funder, Atterbury would have disclosed this in its financial statements, and RMH would have done the same.
Roberts, who is also a non-executive director of Atterbury’s low urban residential unit Divercity, said Atterbury South Africa had wished to convert the loan facility into equity, rather than pay off the facility in cash next year, because it wanted to keep its cash resources to fund developments and pay off debt.
Roberts said the loan facility with Atterbury South Africa was never intended to have been settled on the due date, but repaid via a “reset” of Atterbury South Africa’s operations, prior to the end of the seven year loan term.
But this “reset,” for whatever reasons, had so far not happened. He said Atterbury’s second operational “reset” involved the listing of property REIT Attacq, this after Atterbury had spear-headed the development of the Waterfall mixed use precinct.
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