Deal reached in Pula Steel legal hurdle
Mpho Mokwape | Friday March 1, 2019 13:01
Pula Steel, which was the country’s pioneering steel plant, was built at a cost of P130 million in 2015 and entered liquidation in October 2017 having operated in fits and starts due to financial and technical challenges, including shortage of its raw materials. Creditors owed about P100 million were left in the wake of the plant’s closure.
Pula Steel liquidator, John Hinchliffe told Mmegi that the dispute that threatened the sale had been cleared for now and a winning bidder identified.
“We do have a name for the preferred bidder and we are still negotiating with them and financiers as well, to finalise contracts and change of ownership,” the liquidator said yesterday.
“It is only at this point that we can name the bidder.
“The contracts are there in principle; what’s remaining is a matter of the bidder committing for payments and ownership and that’s what we are finalising.
“Things are looking quite positive at the moment and we are hopeful of finalising this.
“The legal challenge that was there is not an issue at the moment. We came to an agreement regarding the way forward and to allow the tender to go on.
“That matter will go to court in April.”
Earlier this month, one of Pula Steel’s suppliers threw a spanner in the works, demanding a suspension of the sale in order to lay title on part of the plant’s assets. Hindok Exports Limited, an Indian firm, claims it supplied Pula Steel equipment including two 15 tonne furnaces, 80 tonne weighbridge, power components and a crane. Hindok said as at December 31, 2018, it was owed US$989,181 (P10.3 million).
According to documents at the High Court, the two parties recently reached a deal under which the sale could go ahead if, the liquidator, when he has sold Pula Steel, pays the US$989,181 into his attorney’s account with an irrevocable undertaking to paying Hindok should the court order so.
Under the deal, Hindok also has to pay its Botswana attorneys P150,000 to be held in a trust account under an irrevocable undertaking to settle costs should the court rule so.
The transaction, allegedly dating back to 2012, involved the sale by Hindok to Pula Steel, of a “mini steel plant” via oral contract. Hindok attorneys, in their claim before Judge Gabriel Komboni early February, said Pula Steel had fallen into arrears on the payments made for the equipment, with the terms being varied to help the Selebi Phikwe plant cope.
Hindok’s lawyers, Pravda & Knowles Attorneys argue that more tailor-made equipment was supplied later, although the agreement was that all the assets would remain the property of the Indian company until final payment.
In their papers, the lawyers say the equipment should not be included in the Pula Steel sale and alternatively a payment of US$989,181 (P10.3 million) should be made separately to Hindok outside of the sale process.
Minchin & Kelly for Pula Steel liquidator, John Hinchliffe are opposing the claims and say under Botswana no action can be proceeded against a company that is winding up, except by leave of court, which Hindok has not done.
Hinchliffe’s lawyers said the matter was not urgent as Hindok’s lawyer, Mathew Pravda had been aware of the tender process from mid-2018 and in fact represented one of the bidders and had submitted a bid on behalf of the bidder.
“The matter is accordingly not urgent and any perceived urgency has been self created. The deponent (Pravda) has not demonstrated why he cannot be afforded substantial redress at a hearing in due course,” Minchin & Kelly attorneys said. Arguments are due before Komboni on April 9.