A former stockbroker lodged the claim, relating to a BEE transaction involving JSE-listed Northam Platinum.
Prominent South African businessman Lazarus Zim has been summonsed by a former stockbroker to pay him nearly R123.7 million plus interest, for allegedly breaching an agreement linked to a broad-based black economic empowerment (BBBEE) transaction involving JSE-listed Northam Platinum.
According to court documents, Peter Wayne Roberts lodged the claim at the High Court in Johannesburg and is seeking judgment against Zim for the R123.690 615 payment, interest on this amount at 7% per annum from 21 September 2021 to date of payment, as well as costs and any alternative relief.
Zim, who was Northam Platinum’s chair when the deal began in 2014, has indicated through his attorneys that he will defend the matter.
The BEE transaction was finalised on 21 September 2021.
Moneyweb requested comment from Zim via his attorneys. David Kotzen of David Kotzen Attorneys said on Friday they had discussed this matter with their client and, “As the litigation is underway, it is our advice to our client not to comment at this stage.”
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Zim, a former chair of Mvelaphanda Resources, Kumba Iron Ore, Telkom SA, and TransHex Group, has also served as CEO of Anglo American South Africa, managing director of MTN International, and president of the Chamber of Mines.
He reportedly had links with the controversial Gupta family, the alleged kingpins of state capture, but apparently cut ties with the family in 2010.
Roberts was previously the chief investment officer (CIO) of Atisa Group and, in 2023, received a R25 million payout from Discovery Life for a permanent disability claim. The life insurer initially repudiated the payout but was forced to pay it after unsuccessful appeals against a High Court judgment.
Roberts claims he entered into an oral agreement with Zim in March 2014, related to the Mining Charter requirement that Northam Platinum must have at least 26% BEE ownership.
At the time, Northam Platinum no longer complied with the Mining Charter after an earlier BEE deal collapsed.
Zim had previously participated as a BEE shareholder through Afripalm Resources (Pty) Ltd, which, together with Mvelaphanda Holdings (Pty) Ltd, was the primary BEE shareholder of Northam Platinum with a shareholding of 22%.
The collapse of the share price of platinum producers, including Northam Platinum, resulted in the principal BEE shareholders in the company breaching their covenants under the financing arrangements, and the disposal of their shareholding in Northam Platinum to remedy this breach.
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Self-funded BEE structure
Roberts claims Zim wished to participate in a new BEE structured shareholding, but in a self-funded structure.
Regarding this proposed transaction, Roberts alleges he was to advise and assist in formulating a new self-funded BEE structure, in which Zim and other historically disadvantaged South Africans could participate through corporate vehicles.
It is further alleged that Zim would ensure that Roberts would participate to the extent of 20% of the corporate vehicle representing Zim’s interests.
Roberts claims he went on to advise on and assist in formulating a self-funded BEE structure, in which one company as the primary vehicle, would hold the entire issue of Northam Platinum shares for ten years.
Zambezi Platinum Limited was incorporated on 2 June 2014 as a public company and the primary vehicle to hold the Northam Platinum shares, through which the interests of historically disadvantaged individuals would be indirectly held.
Business Venture Investments 1841 (Pty) Ltd was incorporated on 26 September 2014, as a corporate vehicle to be a shareholder of Zambezi Platinum Ltd. Zim allegedly changed the former’s name to Atisa Platinum (Pty) Ltd on 11 May 2015.
Roberts claimed Zim would indirectly participate as a shareholder of Atisa Platinum (Pty) Ltd, Zambezi Platinum Ltd and Northam Platinum.
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It’s further alleged that, on 21 October 2014, Zambezi Platinum and Northam Platinum concluded a framework agreement in terms of which Zambezi Platinum would acquire 31.4% of Northam Platinum’s issued share capital, with a lock-in period of 10 years.
Roberts says Zim arranged for 20% of the issued share capital of Atisa Group to be transferred to Micawber 612 (Pty) Ltd, a company 100% owned by him. He claims this was on the basis that Atisa Group would be the holding company of Atisa Platinum.
But, according to Roberts, sometime before 11 February 2015, Zim “breached the agreement and altered the structure” of Roberts’s participation by substituting Business Venture Investments No 1848 (Pty) Ltd – a company in which Roberts did not hold any shares – as the holding company of Atisa Platinum.
Roberts says shareholders of Northam Platinum approved a transaction on 19 March 2015 that enabled the issue of 159 905 453 shares to Zambezi Platinum. He claims this transaction was implemented on 20 March 2015, resulting in Zambezi Platinum holding 31.4% of Northam Platinum’s issued share capital. Zim participated in the deal through the BVI 1841 Consortium*. (Note, Roberts claims there are several different Business Venture Investment companies, ringfenced and incorporated specifically to hold shares.)
It’s alleged that Zambezi Platinum acquired the Northam Platinum shares through the self-funded BEE structure, with funds from the issue of JSE-listed preference shares.
This meant the historically disadvantaged individuals were not required to pay any consideration for the Northam Platinum shares, which Zambezi Platinum acquired in terms of the transaction.
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Roberts claims a further transaction was implemented on 21 September 2021, in terms of which Northam Platinum:
- Acquired all the preference shares in Zambezi Platinum;
- Acquired 100 693 877 Northam Platinum shares to settle accumulated dividends owed on the preference shares and the redemption of the preference shares;
- Repurchased 59 211 576 Northam Platinum shares from Zambezi Platinum at R160 per share; and
- Acquired voting and economic control over Zambezi Platinum, which then made a distribution in cash to its shareholders of R9 473 852 212.
He states this resulted in R1 212 653 084 being distributed to Atisa Platinum on 21 September 2021, leading to Business Venture Investments No 1848 (Pty) Ltd acquiring a beneficial value of R618 453 073 – which is 51% of the R1 212 653 084.
Roberts alleges that had Zim complied with their agreement, he would have received R123 690 615 on 21 September 2021, which is 20% of the R618 453 073.
*Roberts claimed the structure and effect of this transaction was that:
- Business Ventures 1834 (Pty) Ltd Ltd, held 12.8% of the share capital of Zambezi Platinum and had an effective interest of 20 467 898 Northam Platinum shares.
- Atisa Platinum (RF) held 100% of the issued share capital in Business Venture Investments 1834 (Pty) Ltd.
- Business Venture Investments 1849 (Pty) Ltd held 100% of the share capital of Atisa Platinum (RF).
- Business Venture Investments No 1848 (Pty) Ltd held 51% of the share capital of Business Venture Investments No 1849 (Pty) Ltd and an effective interest of 10 438 628 Northam Platinum shares.
This article was republished from Moneyweb. Read the original here.