One of Cell C’s biggest shareholders has initiated legal proceedings to hamper a recapitalisation process with Blue Label Telecoms, according to a report by BDLive.
Court papers have been handed in by CellSA – an empowerment group which holds a 25% stake in the telco group – which is seeking to have Cell C parent company 3C Communications liquidated.
Blue Label Telecoms is set to purchase a 35% stake in Cell C for R4 billion. As part of the deal, 3C Telecommunications will put money into the company to reduce debt and will retain a 35% stake in Cell C.
The mobile operator’s management and staff will own 30% of the company.
According to BDLive, CellSA executive Solomon Mankazana is alleging that 3C Telecommunications is “both financially and commercially insolvent, and is unable to pay its debts”.
He said 3C was trading recklessly and fraudulently, that 75% of the share capital had been lost, and that liabilities exceeded assets by about R15 billion.
The executive said CellSA had not seen verified or audited financial statements for the group, and that the company operated under a veil of secrecy.
CellSA estimates that Cell C made an operating loss of R2.3 billion in the 2014 financial year, and a loss of R3.8 billion for 2015.
Cell C’s majority stakeholder Oger Telecom said the application held no merit, and that certain people within CellSA were pushing this agenda for their own interests.
The group said the court application would be detrimental to the majority of CellSA shareholders in the end.