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MOD – But Subject To Final Approval

Tuesday 1 September is next key date

Phumelela’s Business Rescue Practitioner, John Evans, has published his long-awaited Business Plan, in which it has been established that MOD (Mary Oppenheimer Daughters), has provisionally acquired the horse racing assets and business from the embattled company following a head-to-head contest with UK Bookmaker, Betfred.

In effect this means that, on approval of the Business Plan by Phumelela’s creditors and regulatory authorities, MOD will take control of Phumelela’s racing assets and establish its vision and own management for the business of racing thereafter.

Approval of the plan, with or without modification, will depend on the outcome of a Creditors’s meeting to be held electronically on the Zoom platform on Tuesday, 1 September 2020 at 11am.

According to a report released by Evans to creditors, which contains step-by-step details of the Business Rescue Process thus far, and full, audited statements of the Company, the implementation of the Plan will rescue Phumelela by virtue of the fact that it will result in a better return for Creditors than would be achieved by the immediate liquidation of the Company.

The estimated return to Concurrent Creditor(s) in terms of the Plan is between 72 and 100 cents in the rand in respect of their Claims against the Company.

This is better than the estimated return in the event of the liquidation of the Company, which scenario envisages a distribution to Concurrent Creditor(s) of 40 to 60 cents in the rand and no surplus funds for the benefit of the Company.

Evans has proposed the opening of a Plan Fund Account, to retain control over the net cash generated from trading the business of the Company. The proceeds of all monies collected from all of the Company’s debtor(s) and receivables will be paid into the Plan Fund, along with the sale of the business and / or Assets.

This Business Rescue Plan proposes that the net cash generated from trading during the proceedings plus further net realisations from the sale of Assets post the Adoption Date will be ceded irrevocably to the Plan Fund and distributed to the Creditor(s) of the Company, and as the case may be the Company in the manner and order as detailed in this Plan, out of the Plan Fund.

When Phumelela went into Business Rescue in May this year, MOD provided post commencement finance of up to R100m to fund the operation of the company during business rescue.

To date R60m has been drawn against that, and MOD have in order to facilitate an orderly sale process, and on adoption of the plan, agreed to provide an additional PCF facility of R550m.

This facility allows the Company to draw three equal amounts directly into the Plan Fund for distribution as provided for in the Plan, starting in October.

Evans noted in his report:

“The BRP received many expressions of interest for the component parts of the business or assets and following a fast track sale process received formal proposals from the interested parties.

“The implementation of the Plan will result in a better financial return and general outcome to Concurrent Creditor(s) as opposed to a liquidation of the Company.

“In preparing this Business Rescue Plan and in formulating proposals the BRP has made forecasts and estimates with respect to Asset realisations, in certain cases assets valuations and the total value of Claims of Creditors.

“The BRP, with input from the Management, assessed the financial position of the Company, its cash requirements in the short, medium and long term and most importantly assessed its viability.

“Shareholders will to the extent that the proceeds from the sale of assets is sufficient to repay creditors in full, receive distribution pro rata to their shareholding in the company.

“Employees will retain their employment and if retrenched will, as a Preferent Creditor be paid their entire retrenchment benefits.

“As at the Commencement Date the Group had 2050 employees most of whom will be transferred in terms of section 197 and 197A of the Labour Relations Act to the new owners of their respective business operations.

“Any employees not so transferred will be retrenched and will receive their full retrenchment entitlement.”

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20 comments on “MOD – But Subject To Final Approval

  1. Henk P says:

    I thought the business rescue practitioner was supposed to put togetger a plan for creditors to vote on. A plan is a detailed proposal to achieve something. I see no clear and obvious plan. Where are the binding agreements that the business rescue practitioner promised is in order to get his extra time to give is a plan that is no plan at all.

    A predict that this is going to turn into a circus. Owners are not going to get increased stakes and since there are no retrenchment the old guard that has done the damage to our racing stay and harvest their incomes doing less work than before. I would rather see Phumelela liquidated for the sake of horse racing to move forward and to start from the ground up. Right now, only creditors and staff are being looked after while owners are getting a pittance in return and are losing hand over fist in ownership acquisitions and training fees. Business rescue is going to last way to long.

  2. Leon says:

    Well spoken Henk.. Get rid of the old gaurd and in with the new.

  3. Marina Munro says:

    I am happy the business will stay in South African hands.

  4. WILLIAM MILKOVITCH says:

    Mr. Henk Prinsloo, it has always been a circus

  5. Yugen says:

    Forgive my ignorance but what exactly does this mean for shareholders?

  6. Desmond Pather says:

    Mr.Editor, what is the source of this information because it is not in the business plan ?

  7. Leon Smuts says:

    I think that if MOD is the successful bidder it will ultimately be a huge win for racing. It might take some time for the positives to feed through but it is bound to bring renewal to the sport. These people have business acumen, the necessary resources and most importantly a real passion for racing and respect for its heritage.
    i don’t think that it will merely be business as usual in whatever form the structure moves forward. This is such an opportunity to redefine a new vision and objectives for racing that will have a long lasting influence over the direction the sport takes in future.
    No doubt profitability will be a requirement but a much larger cut of the proceeds should find its way back into where it matters most, those who invest in the game, be it owners or punters and all the industry stakeholders.
    If done properly an investment in new infrastructure and products could open the door to new acquisition strategies and large scale market building projects which racing has been robbed of for way too many years. Truly hope that MOD comes out on top, the sport needs a racing influence.

  8. WILLIAM MILKOVITCH says:

    Mr. Smuts, I believe racing doesn’t need the influence of those people currently in racing, be it those in the NHRA, the RA, the three racing clubs, the betting operators and those trainers that have previously held positions on these various sunken ships.

    Let it be run by proven wizards in commerce, like Mr. Adrian Gore from Discovery, as one example.

    A networking king.

    The old racing influence, that you close your post with, is just slow poison.

    It reminds me of —-

    A Sunday school teacher asked her little children, as they were on the way to church service, “And why is it necessary to be quiet in church?”

    One bright little girl replied, “Because people are sleeping.”

    The so-called racing people who have that much vaunted passion and know how for the game have
    Just Been Sleeping.

  9. Preston M says:

    @Yugen Shareholder will get between 72 cent to R1 a share, if the Business Rescue is adopted.

  10. Cecil Pienaar says:

    What I take from this article is not ‘if’…. MOD will take over racing with their ‘own management’

    This is good, surely the lot that ran racing into the ground does NOT = “own (New) management”

    Won’t that be the same as Govt and SAA ? If the current Lot stays….

    PS – I could not write this one in Afr, as The Lot is Die Spul in Afr, very disrespectful

  11. Leon Smuts says:

    @William. Mr Milkovitch, unless you know 100% what the new management will look like, you are excluding the possibility of some sweeping changes and strategic new appointments. The staff that remain are very unlikely to be the true decision makers and some were working on very short leashes that left no room for creativity and an expression of racing support on their part in the past. I support almost your entire statement but not that the status quo will remain. No one can be that naive and expect racing to miraculously turn around without much needed intervention and change.

  12. WILLIAM MILKOVITCH says:

    I certainly am excluding any sweeping changes,100% correct Sir.

  13. Leon Smuts says:

    Hope you are wrong William although admittedly most of the time you are not.

  14. Preston M says:

    I support MOD and I think 🤔 it will be good for the long term sustainability of racing. The only issue I have ( and someone please correct me , if I am wrong) is:
    1. Was promises being made to certain key shareholders to vote in favor of M.O.D and if so, will that change the current status quo?

  15. L Stephens says:

    I went to Preparatory and High School. I never failed a year. I passed English without distinction but sufficiently passed. My Mathematics was average and so was my Accounting. I read the Business Rescue Plan of John Evan’s. I wanted to see the details of the MOD deal. I could find nothing. Thinking I was a simpleton, I read it again and again I found nothing. I thought to myself that I must be missing something because the sporting post would not report incorrect facts. I phoned my brother in law and asked him to look at the report. He confirmed to me that there is nothing wrong with me and that the report states nothing about MOD provisionally or otherwise acquiring the horse racing assets of Phumelela. What is going on? We need the truth? Why is it that the RA directors are speaking to Moneyweb on a subject that has got nothing to do with the RA and the RA’s claim having been rejected by John Evans? Why hasn’t the RA told us about its claim and how it is formulated? I am really irritated that the Sporting Post made me think that I had a reading problem when the reality is that the Sporting Post has not kept to the facts set out in the plan of John Evans. Anything reported by Sporting Post which is not in the plan of John Evans needs to be explained to us.

    1. Editor says:

      We are satisfied about the accuracy of the facts as stated.
      Agree that it could be seen as confusing in the light of the BR plan.

  16. Yugen says:

    @Preston
    Thank you
    So we will get 70c on the share approx and then forfeit the share?

  17. WILLIAM MILKOVITCH says:

    Oooh Mr.Smuts, I take no pride or pleasure in been right, or close to right, about the sick issues and dark places that SA Racing finds itself in.

    So thank goodness for the ITV broadcast from York yesterday, it was the best emena for my horse- racing soul.

  18. Cecil Pienaar says:

    Sjoe William ek moes die een 2 Keer lees. Kyk die boere glo mos die beste enema is kaster olie… Toe sien ek dis emena. Ek hoop Maar Pieta of Ed kan verduidelik die verskil tussen die 2 woorde, of jy….

  19. Pieta Louw. says:

    Hi Cecil,

    Ja ek ken nie daai woord “emena” nie…maar soos jy weet ek sukkel maar n bietjie met die Brits.
    Ken daai kaster olie storie…….werk soos n bom.👍

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