Mustek gives assurance to BEE partner

Lesley Stones

Lesley Stones is an award winning journalist, and worked for Business Day as an ICT journalist until 2009. Lesley is currently a travel journalist,...

Full Profile

E-mail

Mustek (MST) has won the legal right to repossess a 30% stake in its Brotek subsidiary that is owned by the black-led Puno consortium.

The high court ruled that Mustek had the right to claw back the shares after Puno breached their loan agreement.

Mustek can pay either their net asset value or fair value.

Kan said the net asset value was about R24m, although Mustek would pay more if auditors decided the fair value was higher. As Mustek originally lent Puno R17m in 2005 to take the stake, the consortium would not be getting less than it originally paid, he said.

Puno spokesman John Poluta estimated the net asset value to be lower, and said he believed Puno might end up with no cash at all after repaying the loan plus interest, which now tops R20m. Puno also had to cover its legal fees, and was ordered to pay Mustek’s legal fees of about R500000.

“We have invested a substantial amount of time in the business, but I think we will walk away with nothing,” Poluta said.

Poluta and Kan were in contact with each other on Friday in an effort to devise a mutually acceptable buyout.

The legal clash between the formerly amicable partners arose when Mustek asked to buy back the Brotek shares so it could strike an empowerment deal at holding company level instead. As negotiations wore on, Mustek realised that Puno had failed to supply a certificate proving the majority of its shareholding was black and that its economic beneficiaries were previously disadvantaged.

Not providing that certificate was a material breach of the loan agreement, Kan said. The judge agreed.

“We did not invent these clauses or set this up as a trap,” Kan said. “These are standard clauses.”

Kan said it was unfair of Puno to complain that Mustek was being unjust in repossessing the shares at their net asset value. “The fact is, Mustek as a listed entity is trading below net asset value,” he said.

Puno lost the court case when the judge ruled that a report from Deloitte, verifying its empowerment credentials, was qualified and was insufficient to fulfil the terms of the loan agreement.

An auditor said on Friday it was normal practice under professional auditing rules to put a disclaimer on a factual findings report to state auditors did not express any assurance of the information provided in the company certificate. That did not mean the report was qualified. “Auditors have to work under those standard practices,” he said.

Members of Puno will meet today to discuss whether to appeal on the basis that the judge should not have found it in breach of the loan agreement because the auditors’ report was perfectly acceptable.

Puno members include former ANC whip Mpho Scott and former chairman of Parliament’s communications portfolio committee, Nkenke Kekana.