Only brave need apply

Posted On Friday, 21 December 2007 02:00 Published by eProp Commercial Property News
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It has been a torrid year for anyone unfortunate enough to have bought shares in property company Bonatla. With the sheriff banging on the company's door for unpaid debts, next year could be even worse.

Bonatla Property HoldingsThe company, founded by the enigmatic Niki Vontas and run by his father-in-law, Robin Rainier, has made various announcements of landscape-altering deals this year, most of which have fizzled out entirely.

For a company seeking to re launch itself as a credible property investment, this is an unfortunate tale of broken promises that won't sit comfortably with its 501 shareholders.

Now one of the parties involved in a failed deal has taken issue with Bonatla, going to court for a warrant of execution that saw Bonatla's bank account frozen.

The roots of this messy dispute can be traced back to February, when Bonatla said it planned to buy the Saxum business from Dalefern Properties for R131m. As part of the deal, Bonatla would sell back two Saxum subsidiaries (Saxum Insurance and Bibleman) to Saxum for R66m, in effect simply buying Saxum Reinsurance.

It was a strange deal, as you wouldn't immediately see any reason for a property firm to buy a reinsurer, but Bonatla said this would "enhance [our] vision of a global property business".

One thing the deal would have done, however, was boost Bonatla's net asset value by a whopping 1 175%. This seemed to appeal to investors and, on the day, Bonatla's share price vaulted 14% to 65c - far higher than its current 40c.

But then, as has been the case with so many other deals, Bonatla announced on May 17 in the footnotes to another announcement that the deal had "lapsed".

Which seems clean enough, but what Bonatla shareholders weren't told was that Saxum had insisted on a R5m "break-fee". This meant that if the deal fell apart, Dalefern would have to stump up this penalty - and Bonatla stood surety for this amount.

For months Saxum tried to get this cash, but only managed to get R1m. So Saxum went to the Johannesburg high court, and on October 2 judge Fritz van Oosten handed down a judgment that Bonatla (and Dalefern) had to pay R4m, as well as interest at 12,5%.

This wasn't paid so, on October 10, the registrar of the court issued a warrant of execution (a copy is in the FM's possession) against "the moveable goods" of Bonatla and Dalefern.

The sheriff of Johannesburg North had little luck when he went to Bonatla's premises - but, amazingly, he did attach Bonatla's bank account, so it's anyone's guess as to how Bonatla is even doing business.

When contacted, CEO Rainier confirmed that "one of Bonatla's bank accounts was irregularly frozen", but claims "this had no effect on Bonatla's operations".

Rainier won't give much detail on the Saxum dispute, either, saying it is sub judice as recent evidence has come to light involving "certain fraudulent activities which induced Bonatla to enter into the agreements with Saxum".

Rainier confirmed that Bonatla had launched a court bid to prevent the warrant of execution from being carried out, and had another "application in the making" to seek a rescission of the court order itself "as a result of the fraud perpetrated on Bonatla". What exactly this fraud involves, Rainier won't say.

Bonatla's lawyer, Ross Munro, says: "I don't want to say too much, but someone involved in the deals set up fraudulent agreements, of which we have copies."

But fraud or not, why weren't shareholders told of the Saxum dispute and the R5m break-fee it guaranteed? And if Bonatla's bank account has been frozen, surely the company ought to have told investors?

After all, this has some rather serious consequences for shareholders, even if the company is still suspended from trading on the JSE.

When it comes to disclosure, Rainier says Bonatla has drawn up a circular that sets out the status of all Bonatla's various deals. Importantly, he says the details of the Saxum dispute are spelt out in the circular and "provision has been made for possible costs".

But the circular has been a long time in coming. In January, when Bonatla announced eight deals worth R350m (which all fell apart), it promised a circular within 28 days, but this was never published. At least in this case, Rainier says the circular has already been lodged with the JSE for approval.

The JSE itself can't be too pleased with Bonatla right now. Not only is there an insider-trading investigation taking place into trading in Bonatla's shares (a probe which Rainier says he asked for after noting suspicious trades), the company has also been forced to swap corporate sponsors after KPMG quit.

Though Bonatla asked for its shares to be suspended, the JSE will only lift the suspension if the company has viable assets, which is why Rainier and Vontas are so eager to tie up a few major deals as a launch pad.

Vontas himself has apparently been instrumental in the efforts to rebuild the company. Though he cannot act as a director after his 2004 sequestration, he is however a "consultant" to Bonatla's asset manager, CDA Consulting.

The collapse of so many deals this year hasn't cooled Bonatla's ardour for making new announcements.

In September it announced a deal to buy two new properties, Scottwaal Beleggings and Morgan Creek Properties. However, these properties were two of the eight deals meant to have been bought in January and which "lapsed". Apparently, they are again on Bonatla's menu, and one can only hope the company has better luck this time.

Then, in October, Bonatla said it was buying two KwaZulu Natal properties for R57m on 99-year leases. The first involved buying 2 350 ha of land from the Amahlubi Land Trust in the Drakensberg, and the other was to buy 3 400 ha from the Sibuyelo Matiwane Community Trust.

Again, this all sounds promising, but having been burnt this year, investors will be particularly wary.

Bonatla started the year at 30c a share on the JSE, and investors piled in after the deal announcements, sending its stock as high as 71c. Now, with the sheriff at the door, its stock languishes in suspension at 40c.

With poor transparency and now dark mutterings of fraud, you'd have to be a brave punter to take a gamble on the company.

Last modified on Tuesday, 22 April 2014 15:07

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