YIELD WTP PROPRIETARY LIMITED (UNDER BUSINESS

YIELD WTP PROPRIETARY LIMITED (UNDER BUSINESS RESCUE)
"The Company"
MINUTES OF A FIRST MEETING OF CREDITORS IN TERMS OF SECTION 147 OF THE
COMPANIES ACT 71 OF 2008 (“The Act”) HELD AT 10 NINTH AVENUE, INDUSTRIA
KROONSTAD, FREE STATE ON 27 AUGUST 2014 AT 12:00
1. Present:
Chairman: Daniël Terblanche (Joint Business Rescue Practitioner) "BRP"
Cobus Kritzinger (Joint BRP)
Peter Whelan (Bowman Gilfillan)
NHS Pretorius (Hygrotech)
M Gerber (Landbank)
Vinesh Ramsaroop; Ian Mansfield (Syngenta)
2. Welcome
Daniël Terblanche (“Terblanche”) opens the meeting and welcomes everyone
present at the first meeting of creditors of the Company.
Terblanche introduces die joint BRP, Cobus Kritzinger (“Kritzinger”) and confirm that
the other appointed BRP, Neil Miller, is not present at this meeting as he is attending
to the first meeting of creditors in Cape Town for Ububele Holdings Limited which will
be held later today.
3. The Business Rescue Process
The reason for this meeting is to inform creditors on the process from the date of our
appointment, being last Thursday, and the way forward.
The reason for the very short notice of this specific meeting was because of the fact
that CIPC backdated our appointment certificate that made it very difficult for us to
stay within the statutory 10 day period on which to convene and hold the 1st meeting
of creditors / employees.
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4. The prospect of rescuing the Company
Landbank is the major secured creditor in the group of companies and they are owed
approximately R202 million.
They have perfected their notarial bonds over the
debtors, stock and various other assets. We are bound by certain decisions by
Landbank, being the secured creditor and also due to the fact that they have taken
possession over these assets by way of perfection of the notarial bond. We cannot
dispose of assets or deal with debtors without Landbank’s consent.
We are busy with our financial modelling of the group of companies on an ad hoc
basis. We have decided, in conjunction with Landbank to commence with a very
urgent bidding process in order to try and extract some value for the affected parties.
As you know, we are in a high season at the moment and we want to ensure that the
interested or successful parties will extract value from this specific season going
forward.
5. Actions to date and General Questions
Terblanche introduces Peter Whelan from Bowman Gilfillan (“Whelan”) who is acting
for the BRP’s.
Whelan confirms that business rescue has two legs to it (1) the company can be
restored to solvency and traded out of its trouble or (2) the business rescue is
focussed on maximising the return for all the affected parties where it appears that
the company cannot trade out of financial distress. In the limited period available to
the BRP’s, we formed a view that it is the second leg that is appropriate. This group
of companies is burdened with massive historical debt and also current debt.
We are now trying to maximise the return and to do that we have to make sure that
the companies continue to tick over and maintain the going concern status. We
would like to maximise the price of the sale of the assets either for some of the
assets, or all of the assets.
We have put a bidding process in place which is completely transparent and anybody
who is interested in buying stock, any assets from any of the companies in the group
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or all of the assets in the group, are in invited to contact us, sign a Non-Disclosure
Agreement (“NDA”) and as soon as that happens they have access to a dropbox
which is populated with all the documentation relevant to someone who is trying to do
a desktop due diligence on the group.
Offers have to be submitted effectively by Monday, the 1st of September 2014. The
BRP’s will then consider those offers together with Landbank and enter into
discussions and negotiation with any interested off parties. By the 10th of September
2014, the BRP’s will indicate whether there is an offer that is acceptable to both them
and Landbank.
The BRP’s are under no obligation to accept any offer.
They do not need to
necessarily accept the highest offer but can accept partly an offer from one bidder
and from another bidder. It is entirely in their discretion. It is important to secure
Landbank’s buy-in because the next step would be for the BRP’s to go back to
creditors to obtain their approval of the business rescue plan which will be compiled
following the acceptance of a particular offer. Landbank is a very substantial creditor.
Without Landbank’s approval, the business rescue plan will not be sanctioned.
The business rescue plan has to be passed by 75 % of creditors. Once that is done,
it will be implemented. If it is not passed by creditors, the company will inevitably
have to be placed into liquidation. It is a very foreshortened process and we are
hoping that this process will be completed by the end of September 2014.
Terblanche confirms that there are not many creditors in the specific Company.
Whelan says that the Landbank has effectively taken control over the assets of the
group, including its debtors and is entitled to do it. It has mortgage bonds and went
to court and obtained a court order authorising to take possession of its security. It is
very difficult for the BRP’s to continue the operations of the company. Without post
commencement finance (“PCF”) they cannot continue.
The BRP’s have had
discussions with Landbank to provide that PCF to enable them to trade in the interim.
The reason why we refer to an interim period is because, given the investigations
that the BRP’s have undertaken to date, we formed the view that it is unlikely that
they will be able to create a business rescue plan so that the group will trade itself
out of financial distress, in other words, over a period of time.
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We formed the opinion that it is not going to happen and the only way to deal with the
assets of the company is in business rescue because it is quick and have all sorts of
other advantages which Daniël can elaborate on. It will be best to rather dispose of
the assets as going concerns for the best possible price other than in a liquidation
environment. A liquidation environment is far more rigid and costly. Without PCF
from Landbank and acceptable offers from interested parties, the business rescue
process will come to an end. Then the BRP’s cannot continue in business rescue and
they must terminate the process.
Terblanche confirms that the companies are dealt with on an ad hoc basis but we still
need to consider the group because the plans will be circulated on an ad hoc basis
but the result will be a group result. Landbank has cross sureties from all the entities.
Whelan says it might happen that an offer might be received for Enviro Crop
Protection but not Yield WTP. If we do not receive and offer in Yield WTP, the
company has to be liquidated. The same applies to for instance Yield Alfa.
Certain creditors have received the notice of this meeting or one of the other
companies and not this specific company. Whelan says that the notices were also
displayed on the website, newspapers and e-mailed where we could. Landbank has
a claim against Yield Alfa of R200 million, so it is actually against the companies that
have signed cross sureties which are almost every company.
If creditors can establish whether there is a reservation of ownership, it can be looked
into. The goods (stock) at the stores are currently under the security of Landbank
and they have agents on the different sites managing it. Someone has to identify the
unpaid stock that has not been sold yet. You will need to liaise with the agents of
Landbank.
From our perspective the bidding process will end on 10 September 2014, our
decisions will be made and discussed with Landbank. Terblanche will in the interim
start with the drafting of the business rescue plan.
Once we have an offer(s) that Landbank finds acceptable include in a business
rescue plan, we will try and expedite the circulation of the business rescue plan. We
will also try and anticipate the date of the second meeting of creditors in order for the
creditors to vote on it, to try and add value for the interested parties.
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Terblanche confirms that there are 2 companies in the group that are not trading
concerns. The BRP’s are dealing with the companies on an ad hoc basis. The
assets will be disposed of on an ad hoc basis, even though it might be one offer for a
number of entities. The assets will still be dealt with within a specific manner.
Whelan mentions that all the operating entities have a liability to Landbank.
Effectively the chances of a concurrent creditors receiving any kind of dividend, are
remote, to say the least. If you can establish your status as a secured creditor in
respect of unpaid stock, then that is one point, but the rest of your claim being a
concurrent claim, there seems no prospect of recovering it from the company.
Terblanche adds to that there are no entities trading at a profit at the moment.
Whelan confirms that trading is continuing at a reduced level.
Terblanche confirms that there will be a proper process of dealing with the disposal
of stock. Any proceeds received on the disposal of those specific items, once you
prove that you are entitled to, it needs to be dealt with. Whelan confirm that, if a
creditor establishes that the stock sold is subject to your reservation of ownership,
then you would be treated as a secured creditor in that circumstances. This applies
to any stock sold after the 13th of August 2014, subject to any deductions, if
applicable.
Terblanche says that a 3rd party will adjudicate all claims, before the second meeting
of creditors. It is important for creditors to inspect and identify their stock because
that will have a definite effect on the value of your claim. Creditors need to finalise
this and revert to us as soon as possible, before their claim can be adjudicated. It’s
important to meet with the agents and go through the items as soon as possible,
before the second meeting of creditors.
Whelan suggest to go to the store and put a sticker on the stock which is not paid for
and to identify it.
Kritzinger also suggests that this process should be done formally.
Landbank has control over all the stock in the depot, so the current debate is almost
not with the BRP’s but very much involving Landbank.
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6. The Claim Process
The claims and supporting documents can still be submitted electronically.
7. The Creditors Committee
A creditors committee is usually formed where there are a great number of
creditors/affected parties involved in the business rescue. In this instance there are
not that many so it is possible to liaise with affected parties on an ad hoc basis. At
this stage there would not be any importance of establishing a creditors committee,
but this is the decision for the creditors to make.
Terblanche confirm that creditors that attended the creditors meeting, will also be
added to the mailing list. The creditors information at hand was obtained from the
creditors’ aged analysis, but advertisements was also placed in the local newspapers
and it was displayed on the website of Ububele to reach as many affected parties as
possible.
The creditors attending the meeting prefer not to form a creditors committee.
8. General:
Terblanche says that creditors’ input in the process is important as business rescue is
a transparent process.
Terblanche thanked everyone present for attending and closed the meeting at 12:44.
Minutes dictated and typed by Yolanda Bruwer, personal assistant, Mazars Business
Rescue Services.
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