Johannesburg - The Industria Development Corporation's (IDC) failed legal action against a black women-owned mining company over a R3billion debt undermines “the struggle for economic transformation and is a destruction of black economic empowerment”.
On Friday, the South Gauteng High Court dismissed the IDC's urgent application to place Kalagadi Manganese, the first black women-owned mining house in South Africa, under business rescue for allegedly being insolvent.
The IDC's actions were labelled as anti-transformation by the ANC Youth League (ANCYL), which slammed the finance institution, saying it was engaged in “an ulterior agenda”.
The IDC had approached the courts and alleged in filed papers that Kalagadi won't be able to repay just more than R3bn the mining company owed the financing institution as at April this year.
“Whilst Kalagadi is currently trading, it continues to do so in insolvent circumstances and incurs major losses each month. An urgent restructuring of its business, including debt and other liabilities, is required and so too is an appropriate moratorium in respect of such debts and other liabilities.
“Kalagadi is financially distressed and it is reasonably likely that Kalagadi will be unable to pay all its debts as and when they become due and payable within the immediately ensuing six months,” wrote Thifhufhelwi Khumalo in an affidavit.
Khumalo is a divisional executive responsible for subsidiaries and post investment at the IDC, which has a 20% stake in Kalagadi.
However, attempts by the IDC to place Kalagadi under business rescue were dismissed with costs by the court on Friday.
On Tuesday, Kalagadi’s founding executive, chairperson Daphne Mashile-Nkosi, welcomed the ruling and called the IDC’s attempts as “misguided”.
“Since July 2019 we have communicated to the lenders that the company’s facilities may need restructuring. We submitted a formal proposal in December 2019 in this regard, and as recently as March 13, 2020,” Mashile-Nkosi said.
David Jarvis, the IDC’s divisional executive for strategy and corporate affairs, on Tuesday said the corporation would explore all options to protect Kalagadi’s future, but that Friday’s judgment did not rule on the case’s merits, but rather its urgency.
“Our application asserts that Kalagadi is unable to service its debt, namely R3bn to IDC and R2.9bn to the African Development Bank. Whether the company has funding to cover running costs is not sufficient, as we argued in our business rescue application.
“The mine has defaulted on its loans and is therefore placing the business - including its employees - in jeopardy. We believe that a court will come to a similar conclusion,” Jarvis said
“Business rescue can save the company from bankruptcy and thereby preserve the worth of what is potentially a valuable asset, place the business on a financial sustainable footing and save the company’s more than 1153 jobs.
“We need to emphasise that our commitment and support to economic transformation is well documented.”