Bookmark

Profile - Sherna Saayman

Standard Bank opposes Yekani rescue plan

Embattled East London electronics company Yekani Manufacturing has opted for business rescue to stave off liquidation by Standard Bank, but the bank has moved to oppose the application.

The company made the announcement in the high court on Tuesday, the return date of a winding-up application by Standard Bank which has been under way since late 2019.

Lawyers for Yekani and the bank agreed that the liquidation application be suspended “pending finalisation of the business rescue application”.

Previously, Yekani CEO Siphiwe Cele stated that the company was pursuing various investment and sales contracts to secure the plant and the jobs of 500 employees.

But on Tuesday, there were no details about the business rescue process either in court or outside.

Yekani legal adviser Akhona Mafani and the company’s counsel, advocate Nathan Segal, were seen briefing Yekani employees on the outcome of the brief court hearing in East London.

Mafani referred the Dispatch to communications consultant Miranda Lusiba, who said in an e-mailed statement that the company’s business and financial processes “including pending or secured business deal are not only sensitive, but confidential as well”.

She said that, in some cases, Yekani had had to sign nondisclosure agreements.

“All these matters are at the heart of the matter before court and therefore providing details on these would not only mean that Yekani is disclosing sensitive and confidential information, but also that it is interfering with the processes in the pending court proceedings and its outcome.”

The Dispatch understands that papers in Yekani’s application for business rescue were lodged with the high court in East London and a hearing was initially set down for March 3.

However, with Standard Bank also opposing the business rescue plan, the matter will be set down for hearing on the opposed roll.

As a result, it is not clear when the matter will be heard.

Lawyers for both Yekani and Standard declined to provide information.

Yekani was acclaimed when its R1bn investment bought into an electronics business in Wilsonia which it relocated into a brand new factory in the industrial development zone in 2018.

But the excitement seemed short-lived, as Standard Bank moved to secure loans and overdraft facilities it had extended to Yekani.

In total, Standard Bank has claimed R88m from the company, but Yekani’s CEO has said the company owes the bank “not more than” R60m.

Cele previously told the East London high court that a final winding up order in Standard Bank’s favour would not be in the interests of the company’s creditors as there was a reasonable prospect Yekani could conclude lucrative contracts and obtain investments which would enable it to pay all cred

itors.

Such business deals included a proposal from the Post Office to acquire set top boxes from Yekani worth R700m.

Sky Blue (Pty) Ltd and Tingo Mobile PLC had expressed interest in investing, with Tingo, registered in Nigeria, offering R80m to avoid the winding up.

Nehawu Investment was also mulling a potential investment, Cele claimed in previous submissions to court.

Canadian blue chip company Smart Technology’s intention to invest could not be finalised because of the liquidation application by the bank, he said.

In his previous submission, Cele provided copies of documents which he said confirmed the interests of these entities.

It is likely that the business rescue process will allow for such prospects to be explored without the threat of liquidation for prospective new investors and clients.

Mafani also previously stated that Yekani employees did not support the liquidation of the company.

But recent media reports also highlighted Cele ’ s lavish lifestyle, which included purchasing a R3.4m Bentley which he financed on the back of the company’s credit facility from Standard Bank.

Apart from the credit it extended to Yekani, the bank has listed R194m in outstanding invoices for equipment bought on credit.

Media reports highlighted Cele’s lavish lifestyle