Warring TopTV investors in messy courtroom brawl

29 November 2014 - 18:10 By Asha Speckman
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FIGHTING ON: Vino Govender
FIGHTING ON: Vino Govender

The bitter feud over shares between the Industrial Development Corporation (IDC) and an erstwhile shareholder in the former TopTV's holding company, On Digital Media (ODM), is heading for trial.

This comes after the High Court in Johannesburg last week awarded First National Media Investment Holdings leave to defend IDC proceedings. Vino Govender of First National Media Investment this week confirmed this.

The IDC, a state-funded entity that sank just under R1-billion into TopTV, initially sought summary judgment last year - a ruling for one party without a full trial - for R293-million to recover a loan made to First National Media Investment to invest in ODM. It also took over First National Media Investment's 2.8million shares in ODM based on an agreement between the two companies, according to an affidavit Govender submitted to court. First National Media Investment owned 28% of ODM.

The IDC later agreed to drop the litigation, value the shares and pay out shareholders or offset the amount against the loan. But Govender said it reneged on the agreement and did not pay a cent.

Govender, founding CEO of ODM, claimed this week that the IDC instead handed the shares to "connected parties" and ODM's value fell because of asset stripping. He said these details would be revealed in appeal papers.

He claimed it was now collecting revenue of R12-million to R13-million from monthly subscriptions compared with R42-million when he stepped down in early 2012. Subscribers had dropped to between 80000 to 85000 from more than 400000 after it s launch four years ago.

Politically Connected?

IDC spokesman Mandla Mpangase denied the sale of shares to politically connected people.

"In terms of the business-rescue plan, StarTimes and the business-rescue practitioner control the process of selecting new shareholders."

Mpangase said the IDC did not agree to drop legal action against First National Media Investment or the guarantors of its obligations to IDC.

ODM has been in business rescue for the past two years, and TopTV has been renamed StarSat by its new shareholder, StarTimes of China.

Peter van den Steen, business-rescue practitioner for ODM, said completion of the business rescue was stalled by delays with the regulator, which has to approve the transfer of a licence to from ODM to StarSat.

First National Media Investment's dispute with the IDC began when it and other BEE shareholders in ODM - First AONE Trade and Invest and Red Gold Investments which is linked to Cosatu - went to court last year to stop the business-rescue plan from being implemented "prematurely".

The IDC blocked the litigation, called up the loans it made to the empowerment firms and threatened to liquidate them if they did not withdraw the application.

The empowerment companies ceded their shares, but Govender said the IDC continued to pursue its claim of R293-million. The parties agreed that the IDC would value the shares and pay out the shareholders.

E&Y was appointed to do the valuation, but the business-rescue practitioner allegedly refused to disclose the information it needed.

Van den Steen said: "We were prepared to make the information available subject to a nondisclosure agreement."

Mpangase said the information requested by E&Y related to future cash flow and other business strategies that StarTimes may want to pursue, and it was afraid the information would be misused.

"IDC [and] Ernst&Young are willing to sign the confidentiality agreements. However, it appears that the former shareholders are not willing to sign the agreement."

The matter is expected to go to trial early next year.

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