The Industrial Development Corporation (IDC) has reached a settlement with the investment holding outfit partly owned by former Old Mutual CEO Peter Moyo, ending public disagreements over allegations that NMT misled the state-owned company about its financial health.
"We are happy with the outcome," the IDC’s head of corporate affairs, Tshepo Ramodibe, said.
"We had a positive arbitration process which resulted in the two parties finding a resolution, and we have subsequently entered into a settlement agreement which brings closure to the matter," Ramodibe said.
NMT has already paid the settlement amount over to the state-owned industrial financier, bringing to conclusion a process that played out in full view of the public in 2019 when the IDC learnt of a suspected misrepresentation of NMT’s financial position.
Claims by the IDC that NMT was not forthright about its financial position became a sideshow in the mud-slinging match in 2019 between Moyo and his employer Old Mutual, which fired him over conflict of interest allegations regarding payments of dividends by NMT.
Moyo was not available for comment at the time of going to press.
While the settlement agreement is confidential as is usual for these processes, Ramodibe says the amount was subject to approval by the IDC’s board.
"We are happy with the final outcome recouping our capital and it was presented to, and accepted by, our board," said Ramodibe, who confirmed the lender recouped its original outlay of R33m, plus an additional amount, and retains shares in Basil Read.
Loan dispute
The dispute concerns a loan of R33.6m the IDC extended to a subsidiary of NMT Capital, Amabubesi, in November 2006 to enable the company to acquire shares in construction company Basil Read.
NMT was required to provide an "irrevocable and unconditional" guarantee to the IDC for the debt. By December 2017, the IDC asserts that the loan had grown to R106m, a figure denied by NMT.
In June 2018, due to the continuing poor economic environment and depressed construction activity, Basil Read entered business rescue proceedings, in which it remains.
Its shares were suspended from trading on the JSE, effectively rendering NMT’s investment worthless.
After this development, the IDC and NMT began negotiations regarding the outstanding debt and this led to the conclusion of a settlement agreement in November 2018.
The settlement required NMT to hand over the 4.64-million shares it owned in the construction company as well as pay the IDC R15m as full and final settlement for the loan to buy the shares, despite the outstanding amount having risen to more than R100m.
The dispute between the two parties made its way into the courts when, in 2019, the IDC learnt of a potential misrepresentation regarding NMT’s financial position.
The IDC asserts that it was misled about NMT’s financial position and that far from being unable to pay the outstanding balance, NMT was about to receive a huge windfall on another investment it had made in Growthpoint Properties.
NMT denied this allegation and the matter was due to be heard in court last year before the two parties agreed to arbitration.
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