NEWS

IDC To Sue After Oakbay Misses Deadline To #PayBackTheMoney

The IDC wants its R293-million loan back from the Guptas following allegations of share price manipulation.

24/11/2017 06:19 SAST | Updated 24/11/2017 06:19 SAST
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JOHANNESBURG, SOUTH AFRICA JULY 04: (SOUTH AFRICA OUT): Economic Development Minister Ebrahim Patel addresses delegates during the Progressive Business Forum on the side-lines of the African National Congress (ANC) 5th national policy conference at the Nasrec Expo Centre on July 04, 2017 in Johannesburg, South Africa. The conference is a gathering of about 3500 delegates from branches across the country to discuss the partys policies going into the elective conference in December, where changes and new policies will be ratified. (Photo by Masi Losi/ The Times/Gallo Images/Getty Images)

The Guptas' Oakbay Resources missed a deadline at midnight on Thursday night to pay back a R293-million loan from the Industrial Development Corporation (IDC) or risk litigation, Fin24 reported.

Economic Development Minister Ebrahim Patel said this in a written reply to a Parliamentary question.

Business Day reported that the IDC will now take legal action after the IDC confirmed on Thursday night that the money had not been paid.

According to Fin24, in 2014, the IDC reportedly loaned Oakbay the money before it listed on the JSE. The money was later converted into stock.

Patel reportedly said he launched an investigation into allegations contained in media reports that "persons and entities associated with it, engaged in unlawful manipulation of its share price".

He said the IDC appointed a legal team to advise it on the matter, led by Advocate Goeff Budlender SC.

"Following that revelation I requested the IDC to advise on the accuracy of the claims, the remedies available to the IDC in the event of those allegations being true, and to identify steps to be taken to address the issue," he said.

"Following an investigation by the legal team, and advice received from them, the IDC has now rescinded, alternatively cancelled, the Restructuring Agreement between itself, Oakbay Resources and other entities in the Oakbay Group.

"The IDC asserts that various misrepresentations and breaches of warranties were committed by the Oakbay Group. The IDC has tendered the return of its shares in Oakbay Resources, and has demanded repayment of the outstanding capital and interest due to it, totaling approximately R293 million," said Patel.

In July, Fin24 reported that analysts said it was difficult to determine the true value of Oakbay because of severe fluctuations in its share price over the last two-and-a-half years.

The IDC said at the time that it expected Oakbay to delist from the JSE as it struggled to find a sponsor because of "negative public opinion".

Business Day reported that the IDC's investigations were prompted by an investigation by the Financial Services Board, which uncovered that a Singaporean company funded by the Guptas bought shares in Oakbay just before it listed to boost the share price.

Oakbay did not immediately respond.