In a notice to members, the Racing Association has explained the background to their claim for stakes being withdrawn and ultimately rejected by the Phumelela Business Rescue Practitioner.
The statement says that on 8 May 2020, Phumelela Gaming and Leisure Limited entered into Business Rescue proceedings.
On 20 May 2020, The Racing Association submitted a claim to the Business Rescue Practitioner of Phumelela for unpaid stakes to be paid by Phumelela in terms of the Stakes Agreement and for amounts owed to the Racing Association arising from its normal course of business with Phumelela.
- Claim for Stakes
In November 2013, The Racing Association NPC entered into a Stakes Agreement with Phumelela Gaming and Leisure Limited, the purpose of this agreement is to regulate the level of stakes paid by Phumelela in respect of thoroughbred horse races held in its jurisdiction.
In terms of clause 5.1 of the Stakes Agreement, the Annual Stakes for all horseraces held by Phumelela for each year of this Agreement is calculated with reference to the financial performance of Phumelela’s previous financial year, (1 August to 31 July) less certain expenses agreed to by the Racing Association.
The Stakes Commitment runs from the period 1 January until 31 December.
Therefore, the Commitment to Stakes for the 2020 season was based on Phumelela Gaming and Leisure Limited’s Annual Financial Statements for the year ended 31 July 2019 and that commitment is paid out from 1 January 2020 to 31 December 2020.
The Commitment to Stakes calculated for the 2020 season was a gross amount of R239 674 782.
For the period 1 January 2020 up to and including the 26th of March 2020, which was the last race meeting held before the country went into “lockdown”, the actual amount of stakes paid out totalled R 46 978 625.
Therefore, the amount still outstanding as per the Commitment to 2020 Stakes was R192 696 157.
Further to this, in terms of the Stakes Agreement, Stakes are calculated on certain percentages of turnovers.
Phumelela has already earned these turnovers for the period 1 August
2019 to 26 March 2020. Therefore, our claim also included that percentage of turnovers that have been earned for the current year. This would be the Commitment to the 2021 Stakes.
This estimated Commitment to Stakes for the 2021 season, based on last year’s turnover figures for a period of 8 months of the year, amounted to approximately R 152 500 874.
Therefore, the claim submitted by the Racing Association in terms of stakes payable was R 345 197 031. However, we did expect this amount to change once the actual and accurate turnover figures for the period of the 8 months could be obtained from Phumelela.
- Claim for Trade Debt
Phumelela Gaming and Leisure Limited is currently listed on our Debtors Age Analysis as owing an amount of R 675 325.06.
The Racing Association and Phumelela have had normal day to day transactions and invoices are raised on an ongoing basis.
The amount above includes invoices for, but not limited to, recoveries on Trophies, Contribution to the Equus Awards, Contributions to the Groom’s Soccer Tournament and Hospitality costs.
- Resolution of RA Claim
The Business Rescue Practitioner has challenged our claim for Stakes on the basis that The Racing Association is not a creditor in terms of Stakes and therefore cannot claim unpaid Stakes from Phumelela.
In order for The Racing Association to assert the right of a creditor, an amount would have to be unconditionally owing to the Association.
In pursuing our claim, we referred the matter to Senior Council and based on their opinion, there is no unconditional obligation to pay Stakes to the Association.
The claim was disputed by the Business Rescue Practitioner and will be rejected. We have therefore withdrawn our claim to Stakes.
All principles pertaining to Stakes will be re-addressed in the New Stakes Agreement.
Our claim for trade debt will be resolved in our favour.
