No plan, and no funding
“We have no proof of funds to support the reopening of the mines, even though we have received confirmation that discussions are being held with interested parties in this regard. We have also not received a copy of the anticipated new financial model to reopen the mine, but have been informed that such a plan is being finalised. No post-commencement funding is forthcoming.”
In terms of the Companies Act, post-commencement financing provides a measure of security for the new owner of the rescued companies so that it does not get swallowed by outstanding creditors. In terms of the Act, the first to be paid out of post-commencement finance are the rescue practitioners, employees and working capital needed to revive the business, with creditors being paid out of future cash income.
In December 2018 the rescue practitioners opened the door for alternative bids but unless these are forthcoming they have instructed their attorneys to commence with liquidation proceedings. “Should we receive confirmation that the funding is in place and that the shares have been transferred to Flaming Silver we would re-consider our position.”
Unless proof of funds is received within the next week, the application for liquidation of the VGSA subsidiaries in business rescue will proceed.
This means that roughly 1 000 miners, who have been without pay for three years, will soon know with certainty whether their jobs are gone or not. The assets have deteriorated with the passage of time, and in the (likely) event of liquidation, will probably be sold off piecemeal for a fraction of their worth had the mines continued.
