Turkish power ship giant Karadeniz Holdings Ltd (KHL) has taken back its shares from its empowerment partners, Powergroup SA, just days before a court would hear arguments in an application to interdict them from doing exactly that.
The move, which also saw Karadeniz update the company’s share certificate on Wednesday to reflect it now owned 100% of the company and not 51% as before, came shortly before an interdict application before judge Shanaaz Mia.
This latest development now also means that the court sitting to be held on Friday in the Gauteng high court is irrelevant because what Powergroup had sought to prevent, through the interdict application, has already taken place.
The application was filed by Powergroup in the last week of August and was postponed a number of times. KHL had given an undertaking to the court that it would not proceed with the removal of the local empowerment partner as shareholders until the matter had been heard and ruled on.
How much the Karpowership contract in South Africa is believed to be worth
— R200bn
Powergroup SA is now locked in an ongoing private arbitration process with Karadeniz in which it is seeking to set aside funding notices issued by parent company KHL, which are now being used as a basis for their removal. The court application was to interdict the taking back of the shares pending the outcome of an arbitration process.
In arbitration papers, Powergroup claims the issuance of the funding notices was done “unlawfully” to trigger a clause in the shareholders’ agreement enabling KHL to exercise its call option on about half of Powergroup's stake, which would be handed to new local partners.
The group claims that the new local partner is top businesswoman Dr Anna Mokgokong, a situation they found out about only recently. Mokgokong denied being in discussions with KHL about the powership deal, saying she was talking to them as part of wider industry discussions.
KHL has said that Powergroup’s failure to comply with the funding notices in March and April triggered a clause in the shareholders' agreement which allowed them to buy back their shares.
The impasse happens as Karpowership SA is in a desperate race against time to achieve financial close by December.
Concerned at the conduct of Karadeniz
— What the lawyers for Powergroup told judge Shanaaz Mia
TimesLIVE has seen correspondence to judge Mia from the legal representatives of both KHL and Powergroup SA on Wednesday, confirming the latest developments.
Lawyers for the empowerment partners told Mia that their clients were “concerned at the conduct of Karadeniz”, while in response the Turkish company’s lawyers said there had been no irreparable harm done, and that if Powergroup succeeded at arbitration, the transfer of shares could simply be reversed.
It is not clear whether the transfer of shares was done with the consent of minerals and energy Minister Gwede Mantashe, who is also a respondent in the matter, as required by law.
The fallout between the two parties has seen a slew of accusations and counteraccusations.
Powergroup has accused its Turkish partners of using them to win their 20-year, R200bn contract, and then seeking to introduce new local partners after they helped them to win. In court papers, they accused KHL of acting in an “illegal, unlawful and oppressive” manner when issuing two funding notices earlier this year saying they needed to quickly come up with R95m in additional funds for working capital and other costs — R48m for KHL and just over R47m for Powergroup.
In the end, KHL came up with the entire amount, with Powergroup’s portion converted into a loan.
The Turks hit back, saying that Powergroup failed to live up to its commitments to provide funding, leaving them with no choice but to seek another local partner to fulfil the government’s requirement for local participation.
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