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CLYDE BERGEMAN AFRICA

PROPRIETARY LIMITED

(Registration No. 1979/004929/07)

ADOPTED

BUSINESS RESCUE PLAN (second and final amendment)

Adopted 28 May 2019

2

INDEX

Page

INTERPRETATION AND STATUTORY INFORMATION

1. Interpretation & Preliminary

1.1 Introduction 5

1.2 Certification & Disclaimer 5

1.3 Definitions 8

1.4 Structure of the Business Rescue Plan 12

1.5 Role of the Practitioner 12

1.6 Role of the Directors 13

1.7 Actions by affected persons 13

1.8 Key dates 14

2. Statutory Information

2.1 History 14

2.2 Corporate Structure 15

2.3 Company Details 15

2.4 Officers and Shareholders 16

2.5 Securities 17

BUSINESS RESCUE PLAN CONSIDERATIONS

3. Reasons for financial distress

3.1 Reasons for financial distress 19

3.2 Historical financial situation 19

4. Prospects of rescuing the Company

4.1 Prospects 22

4.2 Creditors 23

4.3 Receiver of Revenue 24

4.4 Material assets & property to pay creditors 24

4.5 Liquidation versus Business Rescue 24

5 Actions during Business Rescue

5.1 Investigations into the affairs of the Company 26

5.2 Actions taken by the Practitioner and Directors 26

5.3 Other actions taken by the Practitioner 29

3

INDEX

6 Proposal regarding the plan – informally by creditors 31

7 Conclusion regarding considerations 31

BUSINESS RESCUE PLAN

8 Executive summary 33

9 Role of the Company and strategic alignment 33

10 Balance sheet adjustments 34

11 Business Rescue Plan 34

12 Assumptions to the Business Plan 37

13 Moratorium 39

14 Effect on employees 39

15 Effect on creditors 40

16 Effect on security holders 43

17 Conditions for the Business Rescue Plan to begin 44

18 Circumstances for the Business Rescue Plan to end 45

BUSINESS RESCUE ADMINISTRATION

19 Appointments 47

20 Dispute resolutions 49

21 Ability to amend the Business Rescue Plan 50

22 Voting at the meeting 51

23 Practitioners Remuneration 51

ANNEXURES

Annexure A Summary of all Creditors 53

Annexure B Asset valuation certificate 54

Annexure C Projected financial models 55

Annexure D Liquidation & Distribution Account 56

Annexure E Practitioners remuneration 57

4

INTERPRETATION AND

STATUTORY INFORMATION

Section A

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1. Interpretation & Preliminary

1.1 Introduction

On 7 February 2019, Robert Charles Devereux of Qey West Finance Corporation (Pty) Limited was

appointed as Business Rescue Practitioner of Clyde Bergemann Africa (Pty) Limited.

The appointment was made pursuant to a resolution passed by the Directors in accordance with

Section 129 of Chapter 6 of the Companies Act 71 of 2008, as they were of the opinion that the

Company was financially distressed and there appeared to be a reasonable prospect of rescuing the

Company.

Section 150 of the Companies Act 71 of 2008, requires that the Practitioner, after consultation with the

creditors, prepare a Business Rescue Plan for consideration and possible adoption at a meeting to be

held in terms of Section 151. The contents of this Business Rescue Plan are furthermore set out in

S150 and this information is required to facilitate affected persons in deciding whether or not to accept

or reject the plan.

Accordingly, this Business Rescue Plan summarises the financial position of the Company, sets out

observations with respect to the cause of the financial distress of the Company, outlines any offences

that may have been committed by the officers of the Company and the extent of recoveries a liquidator

could pursue (if the Company were to pass into liquidation) and provides recommendations of what

further actions that can be considered in the best interest of creditors.

This Business Rescue Plan has been prepared following an inspection and analysis of documents of

the Company and has been prepared for the benefits of the creditors and all affected parties.

1.2 Practitioner’s statement of Opinion, Certification, Disclaimer and Statement of

independence

The Practitioner has undertaken a proper assessment of the risks to his independence prior to

accepting the appointment as Practitioner and I confirm that I have had no prior involvement with the

Business or its directors.

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Consequently, in accordance with industry practice and legal precedent, I do not consider the above to

adversely affects my independence or prevents me from accepting my appointment as Business

Rescue Practitioner.

The Business Rescue Plan (“plan”) is formulated on information obtained from books and records

recovered from the Company, the Directors, Management and interviews with relevant persons and it

should be noted:

Our investigations have been limited due to the time constraints placed on us by the Companies Act.

There may be certain issues that require additional investigation for an absolute determination to be

formed. Where appropriate, we have highlight these issues throughout the body of the plan and to the

extent necessary, have considered the possible impact of them when making our recommendations to

creditors. It is normal for the Practitioner’s report to creditors to not form conclusive views in relation to

all areas of investigation. Should liquidators be appointed to the Company, the Liquidators will

continue those investigations should there be a perceived benefit to creditors.

We have not carried out an audit of the Company’s documents, nor have we had adequate opportunity

to verify any of the information given to us by the Company except where expressly stated.

The statements and opinions given in the Business Rescue Plan are given in good faith and in the

belief that such statements and opinions are not false or misleading. Except where otherwise stated

we reserve the right to alter any conclusions reached on the basis of any changes in, or additional to,

information which may become available to us between the date of this plan and the date of any

subsequent meetings or reports.

Neither the Practitioner, nor Qey West Finance Corporation (Pty) Ltd, nor any member or employee

thereof undertakes responsibility in any way whatsoever to any person in respect of any errors in this

report arising from incorrect information provided to us.

In considering the options available to creditors and formulating his recommendations, the Practitioner

has made the necessary forecasts with respect to asset realisations and the quantum of total

creditors. These forecasts and estimates may change as asset realisations progress and claims are

received by creditors. Whilst the forecasts and estimates are the result of the Practitioner’s best

assessment in the circumstances, it should be noted that the ultimate deficiency and thus the

distribution or outcome for creditors could differ from the information provided in the plan.

Every effort has been taken by the Practitioner to ensure that the actual information provided appears

to be accurate, complete and up to date and that the projections provided are estimates made in good

faith on the basis of factual information and assumptions set out in this Business Rescue Plan.

7


The actual information provided in this Business Rescue Plan appears to be accurate, complete and

up to date and projections provided are estimates made in good faith on the basis of factual

information and assumptions as set out in the Business Rescue Plan.

The Business Rescue Plan provides for a better return for Creditors than should the Company be

placed into liquidation.

R C Devereux

Business Rescue Practitioner

24 May 2019

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1.3 Definitions

The headings of the clauses in the Business Rescue Plan are for the purpose of convenience and

reference only and shall not be used in the interpretation of nor modify nor amplify the terms of this

Business Rescue Plan or any clause hereof. Unless a contrary intention clearly appears:

Words importing –

any one gender include the other two genders

the singular includes the plural and vice versa

persons include natural persons, created entities and vice versa

The following terms and / or expressions shall have the meanings assigned to them hereunder and

cognate expressions shall have corresponding meanings

“Act” means the Companies Act, Act 71 of 2008.

“Affected person” means any shareholder, creditor, employee

representative or employee of the Company.

“Adoption date” means the date upon which the Business Rescue

Plan is approved.

“Auction value” means an estimate of what will be realised when a

sale of assets occurs on an unreserved open-bid

auction where a sale is concluded upon the fall of the

hammer to the highest cash bidder and which auction

is reasonably well-advertised and attended by

members of the public.

“Auditor” means Deloitte and Touché - Registered Auditors.

“Banks” means the secured banking consortium led by Commerzbank, Germany.

“BBBEE” means Broad Based Black Economic Empowerment

policy that is to address the inequalities of the past in

South Africa.

“Business Day” means any day other than a Saturday, Sunday or

official public holiday in the Republic of South Africa;

as defined by S 5(3)(a)(b) &(c) of the Companies Act

71 of 2008.

“Business Rescue” means Business Rescue proceedings as set out in

Chapter 6 of the Companies Act 71 of 2008.

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“Business Rescue Plan” means this document prepared in terms of S 150 of

the Companies Act 71 of 2008.

“CBZ” means Clyde Bergemann Africa (Proprietary) Limited,

Registration number 1979/004929/07.

“CBPG” or “Group” means Clyde Bergemann Power Group, the overseas

Parent Company and its subsidiaries.

“CCMA” means Commission for Conciliation, Mediation and

Arbitration.

“CIPC” means Companies and Intellectual Property

Commission.

“Claims” means when a Company files for Business Rescue it

owes monies to various affected parties. At Business

Rescue date these parties need to prove to the

Business Rescue Practitioner that money is owed by

the Company. The Practitioner will request that

companies owed money prove this is due and will

require all affected parties to complete a claim form

so that the claim may be evaluated and either

accepted or rejected.

“Concurrent Creditors” means creditors who have neither secured nor

preferred as envisaged in the Insolvency Act.

“Commencement Date” means the date on which the Business Rescue

commenced being 6 February 2019.

“Company” means Clyde Bergemann South Africa (Pty) Ltd,

Registration number 1979/004929/07.

“Contingency Claims” means those claims which may arise against the

Company in respect of a liability which is dependent

on a contingent event, which event has not arisen

prior to the Adoption date.

“Contracts” means those contracts entered into by the Company

with third parties, either prior to or after

Commencement Date.

“Creditors” means all persons natural and legal, having Secured

Claims, Preferent Claims or Concurrent Claims

against the Company.

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“Creditors Committee” means a Creditor Committee is formed when the

number of these persons makes it difficult for the

Practitioner to deal with all persons. This committee

is formed and consult with the Practitioner.

Days” means Business days.

“Dies non” means the period recognised by the South African

Courts during which the attorney’s offices are

recognised as closed and therefore these days not

counted as Business days.

“Director” means the directors of the Company past and

present whose names are set out in this document.

“Disputed Claims” means those Claims which have been logged by

Creditors and have been rejected either in whole or in

part by the BRP and which dispute(s) shall be

determined in terms of the dispute mechanism.

‘Employees Committee” means an Employee Committee is formed when the

number of these persons makes it difficult for the

Practitioner to deal with all persons. This committee

is formed and consults with the Practitioner.

“Employee” means any temporary, contract or permanent

employee of the Company.

“Eskom” means Eskom Holdings Limited Company

registration number 2002/015527/07.

“Group Company” means all companies in the group worldwide except

CBZ.

“Group Loans” means all loans and advances by group companies

and identified as such in this plan.

“IDC” means the Industrial Development Corporation of

South Africa Limited registration number

1940/014201/06

“Insolvency Act” means the Insolvency Act no.24 of 1936, as

amended.

“Labour Act” means Labour Relations Act, Act 66 of 1995, as

amended.

“Management” means the directors and senior management of the

Company.

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“Practitioner” means a Business Rescue Practitioner as defined in

terms of Section 138 of the Companies Act 71 0f

2008 in this instance Mr R C Devereux C.A.(S.A.)

SAICA Registration number 00135571.

“Preferred Creditors” means a creditor receiving a preferential right to

payment as envisaged in Insolvency Act other than

the Receiver of Revenue.

“Post Commencement Finance” means finance provided to the Company once

Business Rescue proceedings have commenced.

“PCF” Creditors” means Creditors that provided post-commencement

finance as contemplated in section 135 of the

Companies act.

“South Africa” means the Republic of South Africa.

“Qey West” means Qey West Finance Corporation (Proprietary)

Limited, Registration number 2014/140947/07.

“Secured Creditors” means creditors having secured claims as envisaged

in the Insolvency Act.

“SARS” means South African Revenue Service.

“Submission date” the date by which all affected persons must submit

their claims to the Business Rescue Practitioner in

this case 30 April 2019.

“Taxation” means the levying of tax.

“Transaction” means a successful sale of the shares of Clyde

Bergemann Materials Handling Ltd in the Company

to a new investor.

“Transaction Closing Date” means the last date of successful closing of the Sale

and Purchase Agreement between the Group and

New Shareholder, being no later than 30 November

2019 unless otherwise agreed between the Group

and the new shareholder.

“Unions” means the registered trade unions associated with

the Company namely CEPPWAWU, NUMSA NUM

and MEWUSA.

“VAT” means Value-added tax as defined in the Value

Added Tax Act, 89 of 1999, as amended.

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1.4 Structure of the Business Rescue Plan

Section A - Interpretation and statutory information

This section sets out the roles of the various parties within the Business Rescue Process, contains

disclaimers, certificates, key dates and other issues. It also includes all statutory information about the

Company.

Section B - Business Rescue Plan considerations

This section covers all aspects of the Business Rescue Process. The reasons for distress,

investigations into the affairs of the Company, actions during Business recue as well as the statutory

requirements relating to assets and liabilities of the Company.

Section C– Business Rescue Plan

This section sets out the Business Rescue Plan, the key assumptions and the effect of the Business

Rescue Plan on various parties.

Section D - Business Rescue administration

This section sets out the voting procedures relating to the persons involved in the Business Rescue

Process, dispute resolution as well as other administrative matters.

Section E – Annexures

This section contains all supporting documents to the Business Rescue Plan.

1.5 Role of the Practitioner

During a Company’s Business Rescue proceedings, the Practitioner has full management control of

the Company in substitution for its board and pre-existing management. The Practitioner;

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may delegate any power or function of the Practitioner to a person who was part of the board

or pre-existing management of the Company;

may remove from office any person who forms part of the pre-existing management of the

Company;

may appoint a person as part of the management of a Company, whether to fill a vacancy or

not;

The Practitioner is responsible for developing a Business Rescue Plan to be considered by affected

persons, and to implement any Business Rescue Plan that has been adopted in accordance with

Chapter 6 of the Companies Act 71 of 2008.

The independence of the Practitioner is a cornerstone of the Business Rescue process and the

Practitioner must be, and be seen to be, independent.

1.6 Role of the Directors

During the Business Rescue proceedings the directors are to co-operate and assist the Practitioner

and to deliver the books and records of the Company to that person. Furthermore the directors are to

disclose all affairs of the Company as a well as any material transactions involving the Company in

terms of S 142 (3) of the Act.

During Business Rescue proceedings each director must also continue to exercise the functions of a

director subject to the authority of the Practitioner, but is bound by the requirements of the Act

regarding duties and financial interests.

To this effect the Practitioner requires each director and senior manager to confirm in writing and

declare the state of the Company as at Business Rescue date and disclose material transactions, if

any that may impact on the Business Rescue process.

1.7 Actions by affected persons

If any Affected Person is in doubt as to what action should be taken arising from the contents of this

Business Rescue Plan, such Affected Person, or Affected Persons are advised to consult an

independent attorney or other professional advisor in addition to any consultation with or without

direction received from the Business Rescue Practitioner.

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1.8 Key dates

Application for Voluntary Business Rescue 6 February 2019

Appointment of Business Rescue Practitioner 7 February 2019

First Employees meetings 18 February 2019

20 February 2019

21 February 2019

First Creditors meeting 21 February 2019

Date of Publishing the plan 6 May 2019

Date of Adoption of plan 28 May 2019

2. Statutory Information

2.1 History

Clyde Bergemann Africa was first established in 1979, when Clyde Blowers South Africa (Pty) Ltd was

registered. In 2001, the Company was ultimately renamed Clyde Bergemann Africa (Pty) Ltd and

integrated into the Clyde Bergemann Power Group.

The Company relocated to Kya Sands in 2002 in order to support its growth from a small equipment

provider to its current status as a turnkey solutions provider, offering a full product portfolio and

complete services. This offering is further supported by its own manufacturing facility and assembly

workshop. It currently has a staff contingent of around 200 motivated people on various sites around

the country.

CBZ provides turnkey projects, equipment, spares, service and maintenance in boiler cleaning

systems, materials handling systems (e.g. ash handling, sorbent injection systems, DRYCON), energy

recovery and air gas handling systems in the following industries:

Power (Utility and Industrial)

Waste to Energy and Biomass

Mining, metals and minerals

Cement

Pulp and Paper

Petrochemical

Currently, CBZ‘s main projects are the design, supply, installation and commissioning of the fly ash

conveying systems at South Africa’s newly build coal fired power stations.

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Understanding the need of our customers to invest in production process improvements and

upgrades, without compromising on quality and minimizing downtime, CBZ has an After-Market Team

to engage with our customers on short and long-term maintenance solutions.

CBZ is an ISO 9001 certified Company with a BBBEE Level 4 status.

2.2 Corporate Structure

2.3 Company Details

Name Clyde Bergemann Africa (Pty) Limited

Registration number 1979/004929/07

Date of incorporation 13 September 1979

Registered address 11 Industrial Road

Kya Sands

Randburg

2163

Principal Place of Business 11 Industrial Road

Kya Sands

Randburg

2163

JP Kirsch 10% Clyde Bergemann

Enzani Molene Holdings 10% Matierials Handling

Moorland Investments 10% Limited

10 % each 70%

Clyde Bergemann

Africa (Pty) Limited

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Income tax number 9128065845

VAT number 4020187490

PAYE number 7690735073

Auditors Deloitte & Touché

Building 1 and 2

The Woodlands

Woodlands Drive

Woodmead Sandton

2.4 Officers and Shareholders

Directors J Kirsch Appointed 1 August 2001

B Nathoo Appointed 27 June 2008

C von Eckardstein Appointed 1 November 2016

Resigned 31January 2019

RA Ludwig Appointed 1 March 2017

VW Pantosky Appointed 1 March 2017

KMM Molamu Appointed 18 September 2017

Resigned 31 December 2018

Company Secretary C von Eckardstein Appointed 1 November 2016

Resigned 31 January 2019

Shareholders

Clyde Bergemann Materials Handling Limited 70% (70 ordinary shares of R1-00

each)

J Kirsch 10% (10 ordinary shares of R 1-00

each)

Moorland Investments (Pty) Limited 10% (10 ordinary shares of R1-00

each)

Enzani Molene Holdings (Pty) Limited 10% (10 ordinary shares of R1-00

each)

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2.5 Securities

Authorised ordinary share capital 4000 ordinary shares of R1-00 each

Issued share capital 100 ordinary shares of R1-00 each

The Company has no further securities in issue. All issued securities’ have been pledged to a

consortium of Banks led by Commerzbank, Germany in terms of a Cession and Pledge

agreement dated 19 December 2016.

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BUSINESS RESCUE

CONSIDERATIONS

Section B

19

BUSINESS RESCUE CONSIDERATIONS

3. Reasons for financial distress 3.1 Reasons for distress

In a sworn statement filed with the CIPC to commence Business Rescue proceedings the

Company’s Board of directors attributed the main reasons for the financial distress as follows:

In and about November 2009 and 2010 the Company was awarded tenders in respect of the

Medupi and Kusile Power Stations for Eskom. The values of the tenders were R 394 million and

R354 million respectively. The on-site progress has been substantially delayed, Medupi by 5

years and Kusile by 3 years and a further 2 years to occur.

These delays have caused extreme financial pressure on the Company with no progress

payments being paid but actual costs being incurred by the Company.

Claims have been submitted by the Company to Eskom in excess of R 210 million of which only

R71 have been paid according to Eskom whilst the Company believes only R 50 million has

been paid of this claim.

In respect of Medupi the Company was forced to accept a settlement in 2016 of R 26 million in

respect of a claim exceeding R 54 million.

Other areas of the Business are profitable, but the two projects have had an adverse effect on

the Company as a whole.

Whilst the Group have injected in excess of R 140 million to assist with cash flow requirements

they decided to no longer fund the Business and the majority shareholders wish to disinvest

from the country. To this effect a BEE transaction in respect of restructuring and loan was to be

funded by the IDC to enable it to address the cash crisis.

As this transaction was not consummated the Company filed for Business Rescue.

3.2 Historical Financial Situation

Z Score of Clyde Bergemann South Africa (Pty) Limited. In 1968, Edward Altman founded the ‘Z

Score’ formula to predict bankruptcy. Initially, the Altman Z Score was found to be 72%

accurate in predicting bankruptcy two years prior to the bankruptcy.

http://people.stern.nyu.edu/ealtman/

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Turnaround managers and mergers and acquisition managers use the Altman Z Score model to

determine risks and develop strategies to mitigate the risks. Similarly, the insurance industry

and the corporate governance departments use the scoring system for various purposes.

The Z score shows the deterioration of the Company over a period of time and a spike of

correction brought about by the cash injection from the Eskom advance in respect of the claim.

Annual Financial Statements

The balance sheet shows a deficit of some R 81 million which is indicative of the distressed

situation of the Company. The spike in increased performance is as a result of a cash

contribution by Eskom during that year. The Company continues to deteriorate thereafter.

Balance sheet

The deferred tax asset is as a result of a tax assessed loss over the period as well as a S24

allowance. Stock has increased significantly due to the new Eskom contracts whilst group

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

n-5 n-4 n-3 n-2 n-1 n

Year

Z-Score

Failing

Healthy

Danger Zone

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advances have increased as a result of losses and nonpayment of stock acquired from group

companies. For the rest the Company balance sheet remains relatively unchanged.

The Kusile claim has not been reflected on the balance sheet as an asset.

Income statement

Losses are mainly as a result excess cost of sales caused by the Eskom contracts.

Contingent liabilities

Guarantees have been issued to customers in respect of construction contracts to the tune of

approximately R 200 000.

Balance sheet

2018 2017 2016

R000 R000 R000

ASSETS

Non-current assets

Property, plant & equipment 3 371 4 287 5 957

Intangible assets 46 7 14

Deferred taxation 33 576 34 952 24 297

36 993 39 246 30 268

Current assets

Inventories 18 013 12 938 9 533

Trade and other receivables 31 936 23 132 30 360

Cash and equilalents 6 117 4 833 2 564

Tax receivable 32 32 32

Total current assets 56 098 40 935 42 489

TOTAL ASSETS 93 091 80 181 72 757

EQUITY AND LIABILITIES

Capital and reserves

Share capital and Accumulated loss (81 061) (84 571) (57 067)

LIABILITIES

Non-current liabilities

Long term portion of instalment sale 691 1488 774

Current liablities

Short term portion of instalment sale 481 806 556

Trade and other payables 74 769 68 705 67 099

Loans from related parties 73 933 56 389 1 248

Provisions 17 569 19 726 3 927

Amounts due to contact customers 6 284 17 196 55 920

Operating lease liability 425 442 300

Total current liabilities 173 461 163 264 129 050

Total liabilities 174 152 164 752 129 824

TOTAL EQUITY AND LIABILITIES 93 091 80 181 72 757

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Income Statement

4. Prospects of rescuing the Company 4.1 Prospects

We have investigated the affairs of the Company and concur that the Medupi and Kusile

contracts with Eskom have resulted in the financial distress. The Company has additional

contracts with Eskom generation division and we have met with the executive and they

confirm that the existing contracts will remain in force.

The spares Business, aftermarket Business as well as smaller projects constitutes a profitable

Business once the Kusile and Medupi contracts have been extracted. The situation at the time

of the publishing of the Business Rescue Plan is that the Kusile contract has been terminated

by the Company, due to an Eskom default and Eskom have invoked the step-in clause to

replace the Company as the contractor on the Medupi site.

For all practical purposes the Kusile and Medupi contracts group capital no longer run, and the

focus will be on the core Business in the future.

2018 2017 2016

R000 R000 R000

Revenue 299 126 255 516 213 140

Cost of Sales (277 598) 272 931- 209 031-

Gross profit / (loss) 21 528 17 415- 4 109

Other income 770 445 410

Operating expenses 15 336- 18 594- 31 624-

Profit / (loss) from operations 6 962 35 564- 27 105-

Investment revenue 536 80 126

Finance costs 2 612- 2 674- 652-

Profit / (loss) from operations 4 886 38 158- 27 631-

Taxation 1 376- 10 655 7 886

Toatl comprehensive income/(loss) 3 510 27 503- 19 745-

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The financial effect is as follows:

Profit & loss per division

Medupi and

Year After Market Spares Projects Kusile

R000 R000 R000 R000

2017 4 013 12 660 7 211 -

40 854

2018 11 900 31 131 3 613 -

24 529

2019 16 592 19 490 -

3 207 -

33 531

Clearly the Business must be downsized to accommodate the Business of spares, aftermarket

and projects.

4.2 Creditors

The number and value of creditors and claims and their category is set out in the table below.

It sets out claims submitted, and claims assessed and accepted by the Practitioner.

Submitted Secured Preferred Con-

current Total

R000 R000 R000 R000

Dependant 129 764 0 3 885 133 649

Independent 0 8 036 177 881 185 917

129 764 8 036 181 766 319 566

Assessed Secured Preferred Con-

current Total

R000 R000 R000 R000

Dependant 126 603 0 3 885 130 488

Independent 0 8 036 48 759 56 795

126 603 8 036 52 644 187 283

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4.3 Receiver of Revenue

The Receiver of Revenue is currently owed no money in terms of Normal Taxation owing as

the Company has an assessed loss for taxation purposes.

All VAT and PAYE obligations are up to date.

4.4 Material assets & property to pay creditors

There are no assets or property to pay creditors as the Company has ceded and pledged all

assets and claims it owns in favour of Commerzbank Finance. This is to cover a facility

agreement for the Clyde Bergemann Group to cover group financing arrangements.

4.5 Liquidation versus Business Rescue

A liquidation and distribution account is included in the Business Rescue Plan and is set out in

Annexure D.

The Company has minimal assets compared to its liabilities and the shareholder loan is an

amount of R 126 million and in addition to this it is covered by a cession and pledge of all of

the Company’s’ assets in favour of Commerzbank. Should the Company go into liquidation the

bank will rank as a secured creditor thus leaving nothing for concurrent creditors.

The dividend proposed in Business Rescue versus liquidation is as follows:

Dividends In Liquidation In Business

Rescue

Cents Cents

Secured 1.00 0.20

Preferred 0,73 1.00

Concurrent - 0.20

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Timing

The Business Plan will be implemented in a far shorter time frame than in liquidation

proceedings.

The average time to conclude a liquidation process of this nature can take up to 36 months.

Employees

One of the fundamental principles of the Business Rescue Process is the concept of job

retention. Under the proposed plans eventually not all jobs will be retained but if the Business

Rescue is successful some jobs will be retained.

During that period employees will receive remuneration.

Employees that would be retrenched under Business Rescue will receive full retrenchment

packages. First payments will be made as funds are made available. In liquidation employees

would be entitled to receive a maximum on R 28 000 per staff member to the extent that there

are funds available. Such payments would only be made once the final liquidation and

distribution account has been approved. This occurs at the end of the liquidation process.

In a liquidation all jobs are lost immediately and in this case it is high unlikely that a liquidator

can trade in the Company to retain some jobs.

Receiver of Revenue

SARS rank as a Concurrent Creditor under Business Rescue, but under liquidation they rank

as a Preferred Creditor which influence the Liquidation Dividend if SARS would be owed

monies.

.

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5. Actions during Business Rescue

5.1 Investigations into the affairs of the Company

5.1.1. General

During the investigations into the Company’s affairs no significant or untoward irregularities were

noted. Note no audit or forensic investigation has been conducted. Nothing required reporting in terms

of S141 (c) of the Companies Act.

5.1.2 Kusile and Medupi Eskom contracts

These contracts are the main reason for the demise of the Company and for its financial distress and

this has been confirmed in the investigations into the affairs of the Company. The Kusile contract is

also subject to a claim against Eskom and the Practitioner has engaged with Eskom to finalise that

claim as a matter of urgency. The claim can be up to a maximum of R 160 million, as R70 million has

already been advanced by Eskom. The total claim is R 210 million, but the final amount still has to be

determined and agreed upon.

5.1.3 Parent Company pledge and cession

On 19 December 2016 the Company entered into an agreement whereby it ceded and pledged all its

assets including claims to the Banks. This was in terms of a Group arrangement. The Practitioner has

investigated the legality of the transaction and all legal requirements regarding resolutions and liquidity

test have been met and the Practitioner is satisfied that the transaction is not voidable or illegal.

5.2 Major actions taken by the Practitioner and Directors

5.2.1 Treatment of contracts

General contracts were reviewed and very few have been set aside or cancelled. This has been done

in conjunction with management and takes into account the operational needs of the Company.

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The leasing of the premises in Kya Sands has expired in December 2019 and is currently

running on a month by month basis and will be renewed once the Company is in a stronger

financial position.

Rent is currently being paid on a month by month basis. The landlord is New Emerging African

Technologies (Pty) Ltd a Company owned by two local Company directors of Clyde Bergemann Africa

(Pty) Limited.

Rent paid to a third party for additional premises at Kya Sand has not been renewed as part of the

downsizing strategy and all materials and equipment has been moved to existing premises.

5.2.2 Kusile contract

Eskom was issued with a notice of cancellation by the Company on 25 February 2019 and the

Company subsequently cancelled 28 days later on the basis of non-performance by Eskom regarding

certain contractual matters. The cancellation has been disputed by Eskom and they have requested

that the matter be referred to arbitration. The Practitioner is of the opinion that the cancellation is valid

and that in terms of S133 the general moratorium on legal proceedings against the Company applies

and as such has advised Eskom that the Practitioner will not give consent for the arbitration to take

place.

The Practitioner has furthermore entered into discussions with management of Eskom on the basis

that the contract is of a matter of national importance to Eskom and the losses it causes to the Utility

are so large that it is in the interest of both parties to resume the contract. This will only be done if

Eskom guarantee that the Company will not incur any losses in the event of a resuscitation of the

contract.

The security bonds on the contract have lapsed some time ago and were not renewed. The Kusile

contract currently owes the Company R 9.6 million for completed work and they are refusing to pay

these monies over. The Practitioner has been trying to resolve this matter since his appointment.

Eskom claim that there is a damage claim against the Company and thus are withholding these

monies. No claim has been submitted by Eskom in the Business Rescue Process despite numerous

requests for a claim.

The matter is ongoing.

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5.2.3. Medupi contract

On 6 February 2019 Eskom served a notice to cancel its contract with the Company. Discussions were

entered into on the basis that the contract will be ceded to a third party. This concept was eventually

not adopted by Eskom management and the “step in clause” initiated. This clause calls for a tender

process to appoint a contractor to step into the place of the Company and finalise the project.

The tender closes on 15 May 2019 and indications are that the award will take place in the early week

of June 2019. No claim has been submitted by Eskom in the Business Rescue Process despite

numerous request for a claim.

The Medupi contract currently owes the Company R 4.7 million for work completed in December 2018

and January 2019. The security bonds expired, and a dispute arose about this resulting in the non-

payment of these amounts. The Practitioner has been trying to resolve this matter since his

appointment.

5.2.4. Kusile claim against Eskom

In 2016 the Company submitted a claim against Eskom for an amount of R 210 million and this matter

is ongoing. During 2017 Eskom paid over an amount of R 71 million to the Company as a part

settlement of the claim whilst the Company only recognises R 50 million as part settlement of the R

210 million claim. The Company contend that the additional R21 million is a payment in the normal

course of business for work completed. The outstanding amount of R 160 million is thus outstanding

by Eskom to the Company.

The Company has engaged the services of Evra Consulting to assist with the claim and finalise it. This

has been ongoing. The Practitioner has met with these consultants and has had discussions on ways

forward.

The Practitioner has engaged with Eskom regarding this claim with a way forward. It has been agreed

that Eskom will supply a consultant from the firm HKA to assist with the claim and expedite the matter

as a matter of urgency. The claim value needs to be assessed and it is agreed that if the Company,

after finalising the claim in a consultative manner is not satisfied the arbitration route of DAB will still be

available.

The matter is being pursued by the Practitioner as a matter of urgency.

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5.3 Other actions by the Practitioner

Management Control

The Practitioner has operated from the Johannesburg Office which is the place of Business of

the Company and took full management control of the Company in substitution for its board

and pre-existing management and supervised the operations of the Company. The

Practitioner has:

• Secured and took possession of Company assets including the bank accounts;

• Notified the statutory authorities of our appointment;

• Instructed Directors to disclose all affairs of the Company;

• Received the books and records of the Company;

• Reviewed the statutory records of the Company;

• Reviewed the Audited group set of financial statements;

• Held the first meeting of Creditors;

• Received and investigated claims from Creditors;

• Set deadlines for the submission of Creditors’ claims;

• Convened meetings with the majority of creditors and creditors appointed a

Creditors Committee;

• Had meetings with the creditors committee;

• Convened a meeting with the employees where the employees appointed a

Committee of Employees;

• Had meetings with Employees;

• Commenced investigations with respect to possible voidable and other

recoverable transactions;

• Reviewed the Bank statements for the last six months;

• Assumed control of the books of account;

• Investigated any legal claims against the Company;

Executive Meetings

During the period the Business Rescue Practitioner, the directors of the Company and certain

key senior management had regular meetings for the purposes of updating all parties on the

development of the Business Rescue. Key decisions were made at these meetings.

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Reporting to the CIPC

The Business Rescue Practitioner has complied with all statutory obligations under the Act

and will render a monthly report to the CIPC as required in terms of the Act.

Trading

The Company has not ceased trading and the Business Rescue Practitioner together with

management actively and regularly reviewed the cash flow, procurement and sales to

minimise risk and maximise returns to allow the Company to trade.

Insurance

The Practitioner together with management have reviewed the insurance cover to ascertain

whether it is suitable for the Company. The cover is adequate, and the Business Rescue

Practitioner will continuously review the cover. Cover needs to be renewed on 1 October 2019

Creditors

At the first creditors meeting held on 21 February 2019 the situation regarding the Company

was discussed and elaborated upon. A Creditors committee was formed with 10 members

representing Creditors. The Practitioner has had meetings with the committee.

The Business Rescue Practitioner has engaged with the Group Bankers, The Standard Bank

of South Africa and is in communication with them regarding the Business Rescue process.

Employees

With the extraction from Medupi and Kusile, 198 Fixed Term Contracts have been terminated

and 12 employees have been terminated by invoking Section 189A of the Labour Relations

Act.

Further Section 189A letters have been issued to employees so that the Company will be

aligned to its future operations in terms of this plan.

There are historical ongoing matters at the CCMA that are being dealt with.

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Liquidation application

On 2 April 2019 Efficient Scaff CC brought a liquidation application against the Company on

an urgent basis. The Company defended the action and the case was stuck off the role due to

lack of urgency.

Nothing has transpired since.

Post Commencement and Funding

The Practitioner is actively canvassing Banks, Financial Institutions, Investors, and the likes

for investment into the Group as well as for Post Commencement Funding for the Company.

Auditors

The Practitioner has engaged with the Auditors and discussed the Business Rescue process.

It has been agreed that the audit for the year ended February 2019 be delayed until such time

it is determined that the Company is a going concern.

6. Proposal regarding the plan – informally by Creditors

In terms of S 150(2)(a)(vi) of the Act a Practitioner is required to state whether the Business Rescue

Plan includes a proposal made informally by a creditor of the Company. The Business Rescue Plan

developed and proposed does include proposals by the Group.

7. Conclusion regarding considerations Taking into account all of the above factors the Practitioner is of the opinion that there is a reasonable

prospect to save the Company.

32

BUSINESS RESCUE

PLAN

Section C

33


8 Executive Summary

The plan incorporates the following concepts. The Company will be downsizing to be a

functional organisation that will sell spares, offer an aftermarket service and eventually

conduct a project Business. Downsizing will be achieved by way of staff reduction and a

reduction of operating costs.

The Company has extracted itself from the Medupi and Kusile contracts so no ongoing losses

will occur. The Business Rescue process will pursue a claim against Eskom on the Kusile

project which may be as large as R160 million. Eskom may have claims against the Company

due to the secessions of the contracts, but no claim has been submitted by Eskom in regard to

this. The Medupi contract is subject to a” step in clause” so there will be no further

involvement by the Company. The Kusile contract may be resuscitated on the basis that no

losses will be incurred by the Company and that this Business be ringfenced in a separate

subsidiary.

The Group considers to fully disinvest and the possibility of signing a licence agreement with

the Group or revising the existing license agreement to utilise technologies is mooted.

Subject to a consent of the Banks and a return of the Group’s parent Company

guarantees and original bank guarantees by Eskom, the Group loans will be subordinated

at the Transaction Closing Date to ensure that the Company is in a solvent position after

business rescue.

Subject to an agreement with the Group, the new investor will be required to capitalise the

Business and provide a bond facility

Concurrent creditors will be compromised at 20 cents in the Rand and depending on the

success of the claim by the Company on Eskom, peak at 40 cents in the Rand.

9 Role of the Company and strategic alignment

The Company sees itself as key to the support of Eskom and is of national importantance for

critical electricity generation now and in the future. This is applicable to the existing power

stations as well as to the Medupi and Kusile power stations.

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10 Balance sheet adjustments

10.1 Balance sheet adjustments prior to Business Rescue

There are no adjustments to the balance sheet prior to Business Rescue as the

Practitioner is of the opinion that the assets are fairly represented. The amount of R 9.6

million and R4.7 million due from Eskom will remain in the balance sheet as debts due as

the Company has completed this work and is entitled to payment.

Furthermore, the Practitioner will engage with SARS regarding the VAT on these

amounts and request that they administratively collect the VAT directly from Eskom and

not burden the Company with this additional cash flow burden.

In the event of the plan being adopted, Business Rescue creditors will be adjusted for, on the

balance sheet in terms of the implementation of the plan. Likewise, adjustments will take place

as the envisaged sale of shares transpires.

11 Business Rescue Plan

11.1 Change in shareholder

Clyde Bergemann Materials Handling Limited have stated they wish to disinvest from the

country. Various parties have expressed interest in acquiring the shares. The Transaction

will be a transaction that will be dictated to by the selling and buying parties and in this

regard, it is under the Group’s sole discretion to decide with whom the negotiations in

respect of the Transaction take place and, under consideration of point 10.2, under which

conditions the term sheet, Sale and Purchase Agreement and any further agreement will

be concluded.

On the Transaction’s Closing Date, a revised or renewed licence agreement shall be issued by

the Group and entered into with the Company. Such license agreement is conditional to a

successful business rescue and the avoidance of the Company’s liquidation.

On the Transaction’s Closing Date and after the Banks’ prior consent, having been had and

obtained, all cession and pledges associated with Commerzbank will be cancelled and

nullified. As a part of the settlement between the Company and Eskom, all guarantees and

suretyships, in particular the parent Company guarantees issued by the Group, are to be

returned.

35


The new shareholder is to facilitate a lump sum payment of USD 2.7 million which is one

payment due as result of the cession and pledge over the assets and shares being released

by the Banks.

All bonds issued on behalf of the Company will be reissued in the name of the Company or

local underwriter.

The settlement with Eskom is to be substantially completed by September 2019 and the

Transaction by November 2019, unless otherwise agreed in writing between the Group and

the new investor.

11.2 Licence agreement

It is envisaged that a renewed licence agreement be entered into by Clyde Bergemann

Materials Handling Limited and the Company.

All cession and pledges associated with Commerzbank will be cancelled and nullified.

All guarantees and suretyships are to be retracted.

All bonds issued on behalf of the Company will be retracted and reissued in the name of the

Company or local underwriter.

This transaction is to be substantially completed by December 2019.

11.3 New investor

Reasonable efforts shall be made that the new investor injects a minimum of R20 million as

working capital and a bond facility of R 60 million minimum. The R 20 million may be by way of

a loan or a facility arrangement.

11.4 Balance sheet restructure

The Company reserves the right to borrow money by way of a loan or facility finance.

Subject to the consent of the Banks and a return of the Group’s parent Company

guarantees and the originals of the bank guarantees by Eskom, the Group loans will be

subordinated at the Transaction Closing Date”

The Banking Consortium led by Commerzbank, Germany have a cession and pledge of all

assets of the Company including Insurance Refunds, if applicable, as well as all claims

recoverable from Eskom.

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The amounts due to the Group which have been ceded to the Banks totals USD 9.3 million.

This amount is made up as follows;

Capital loan USD 7.4 million

Trading loan USD 1.9 million

The Capital loan will be subordinated in full on the Transaction Closing Date and the Trading

loan will become repayable over a period of three years. This as compensation for the release

of all cessions and pledges.

Should the Eskom claim be paid the Group will participate in the distribution on a pro rata

basis. The shortfall of the Trading loan will be repaid by the Company within three years from

the Transaction Closing Date in quarterly instalments.

The balance of the amount due should it not be covered by the paid Eskom claim will accrue

interest at a rate of 3% (three percent) compounded monthly.

The compromised amounts of the creditors will be effective at the date of the adoption of the

Business Rescue Plan.

11.5 Rightsizing of existing Business

The Company has exited the Medupi and Kusile contracts and all costs associated with this.

Cost cutting measures and rightsizing of the Business has started to encompass a Company

that initially will be a spares and aftermarket Business.

A retrenchment of personnel is underway.

11.6 Eskom claim – Kusile

The Business Rescue Practitioner will pursue the claim against Eskom for damages, delay

damages claims on the Kusile contract. This process has started during the Business Rescue

process.

The Business Rescue Practitioner will have the discretion to settle changes to the claim value

should this be reasonable, after consultation with the Group.

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11.7 Medupi contract

The contract is subject to a notice of termination and now subject to a step-in clause and the

Company will assist in this regard to ensure smooth handing over and mitigation of losses.

11.8 Kusile contract

This contract has been terminated by the Company to mitigate losses.

The Company will explore the possibility of revoking the cancellation and re-instating the

contract should an agreement be met regarding the claim by the Company against Eskom as

well as any potential claims against the Group or the Company.

Should the contract be continued due to the revoking of the cancellation this contract will be

housed and ringfenced in a separate wholly owned subsidiary. A precondition will be that the

contract is not loss making.

12 Assumptions to the Business Plan

12.1 Assumptions for the 2020 financial year

The following assumptions have been adopted in producing the forecasted figures for the

February 2020 financial year;

The Contracts associated with Medupi and Kusile have been removed from all

forecasts on the basis that the one contract has been cancelled and the other is

subject to a “step in clause”;

It is assumed that the Kusile claim by the Company against Eskom and the

unsubmitted claims net each other out;

A small cost associated with the de-establishment is included in the budget;

All monies due to employees is included in the budget and is paid in full;

The Company is being right sized to cater for some spares and aftermarket or

maintenance Business with minimal risk;

Existing contracts remain in force. This assumes Eskom traditional Business and

normal industrial Business;

38


The Company will continue to source spares from elsewhere in the world or from the

Group, if and to the extent agreed to in a Licence Agreement with regard to the

Transaction;

No new project work will be sourced until the Company is out of Business Rescue;

Salaries and wage increases have been based at an overall 7%

Costs have been forecast taking 2019 as a base, and a zero based budget policy

applied into take to account the downsized organisation;

Maintenance contributions have been based on the contractual obligations and a

limited increase in new Business;

The Company will have the ability to borrow money;

The balance sheet structure will remain the same;

Reasonable efforts will be undertaken to generate a capital injection of a minimum of

R 20 million from a new investor and a facility of R 60 million minimum to issue bonds

as security for contract work acquired;




Costs have been increased by 7%;

Revenue has increased by 7%;

A 10% increase in for both blue and white collared workers split between June and

September has been budgeted for based on the timing of maintenance contracts;

Projects have started to materialise;

Infra structure and cost structure has remained the same;

Large spares orders are anticipated from Medupi, Kusile and existing power stations

in the material handling section as well as boiler cleaning sections;

The Company will start pursuing Business in some sub Saharan countries;




39


Costs have been increased by 7%;

Revenue has increased by 7%;

A 10% increase in for both blue and white collared workers split between June and

September has been budgeted for based on the timing of maintenance contracts;

Projects has started to materialise;

Infra structure and cost structure has remained the same;

13 Moratorium

In terms of the Company’s Act and S133 the commencement of Business Rescue

Proceedings places a moratorium on all legal proceeding against the Company. The

moratorium will remain in place in terms of S133 until the Business Rescue Practitioner files a

“Notice of Substantial Implementation of the plan” with the CIPC.

14. Effect on employees

As at the commencement date, the Company employed approximately 400 people which

headcount will be reduced to approximately 200 people by 5 April 2019. The downsizing is

because of the cessation of the Medupi and Kusile contracts but allows for an affordable and

competitive structure for the resized Business.

Regarding existing employees there has been no change to their existing terms and

conditions of employment.

14.1 Contract employees

Employees on the Medupi and Kusile Contracts were served notices to end their contracts in

accordance with the conclusion of the Medupi Power Station project and the Kusile Power

Station contact. This was done on the 22nd

of February 2019 and 26th March 2019 respectfully.

Contractors were not required to work their notice periods and will be paid in lieu of notice.

Monies will be paid to contractors once funds are available and they will be treated as

preferred creditors.

40


Where applicable priority has been given to facilitate exit medicals.

Dividend in Business Rescue ` Preferred creditors

`

Contractor employees - all amounts due in terms of their contracts

R1-00 in the Rand

14.2 Employees

The Company embarked on a retrenchment program and S189 notices were issued to the

various employees in terms of the Labour Relations Act.

Outstanding salaries and wages will be paid.

All leave and notice period due will be paid.

One week is payable for each complete year of service and will be paid.

Allowances will be paid where applicable.

Where applicable priority has been given to facilitate exit medicals.

Monies will be paid to employees once funds are available and will be treated as preferred

creditors.

Dividend in Business Rescue Preferred creditors

Employees - in terms of a retrenchment in terms of the LRA with 1 week for every completed year of service R1-00 in the Rand

41


15 Effect on Creditors

15.1 Effect on classes of creditors

Secured independent creditors

The Company has no secured independent creditors as all payments made to these parties

are up to date. Secured creditors relate to Standard Bank, Imperial Logistics and other

suppliers that are supplying vehicles and small assets on rental or leases. They now rank as

post commencement funders and all payments are up to date.

Payment to these creditors will be paid in accordance with current agreements. Standard

Bank reserves its rights to proceed against any third parties who have bound themselves as

sureties for the debts of CBZ.

Secured dependent creditors – Group Company

Subject to the consent of the Banks and a return of the Group’s parent Company

guarantees and original bank guarantees by Eskom, all Group loans will be subordinated

at the Transaction Closing Date until such time all possible debts with the IDC and the Group

have been paid.

The cession and pledge agreement signed on 16 December 2016 will lapse upon the fulfilment

of the Transaction’s Closing Date.

Dependent creditors – Others

All amounts due to the other dependant creditors will be an amount equal to concurrent

independent creditors. This category of creditor relates to rental due by the Company to New

Emerging African Technologies (Pty) Ltd prior to the Business Rescue date. The Company is

owned by two local directors of the Company and is ranked as a concurrent creditor

Dividend in Business Rescue

Dependant creditors

Other dependant creditors 20c

42


Concurrent creditors

Business Rescue Creditors will be paid in accordance with the plan on a compromised

amount and once that is completed S154 of the Act will apply and these debts will have

deemed to be settled in full and final settlement.

Concurrent creditors will be paid in accordance with current agreements. Standard Bank

reserves its rights to proceed against any third parties who have bound themselves as

sureties for the debts of CBZ.

Post commencement funders

Post commencement funders will be paid in full.

Dividend in Business Rescue Dependant creditors

All post commencement funders R1-00 in the Rand

15.2 Ranking of payments to classes of creditors

15.2.1 Concurrent dependant creditors

These dependant con current creditors of the Company receive a dividend in terms of this

Business Rescue Plan equal to the concurrent independent creditors.

15.2.2 Preferred creditors

Preferred creditors are defined as contract employees and employees and will be paid in full

once the Eskom payments have been received. Should this take longer than 6 months from

the date of the adoption of the plan the first 50 cents payable to concurrent creditors will be

delayed and the preferred creditors paid. Thereafter the following 50 cents will be paid on a

Parra Passu basis as and when the concurrent creditors are paid.

43


15.2.3 Concurrent creditors

Concurrent creditors will receive 20 cents payable as follows:

The amount will be payable before 29 February 2020.

Should the net Eskom claim be R20 million or more the amount will be settled within 30 days

of receipt of the Eskom monies.

Should the net Eskom claim be successful for every R10 million received in excess of R 20

million, the concurrent creditors will receive an additional distribution of 5 cents capped at 40

cents.

15.2.4 Treatment of Retentions

A sub-contractor's claim against the Company for the payment of retentions for the work done

prior to the Company entering into business rescue that is prior to 6 February 2019 will

accordingly constitute a claim that will be dealt with in accordance with the plan.

Where retentions are withheld on payment certificates for work done post the commencement

of the business rescue proceedings that is after 6 February 2019 in respect of viable projects

these will be repaid in terms of the relevant contracts.

16 Effect on security holders

There is only one class of security holder and four shareholders as stated in section A of the

Business Rescue Plan and the following is the effect on each shareholder.

Enzani Molene Holdings (Pty) Limited 10 shares

These shareholders have opted to give up their shares and the Company has entered into an

agreement to buy back these shares and their loan accounts will be written off. This

agreement has been signed, but not in effect. The agreements will be given effect under the

Business Rescue process as agreed between the parties prior to Business Rescue.

44


Clyde Bergemann Materials Handling Limited 70 shares

The Group has made a strategic decision to disinvest from South Africa in full. All its shares

are available for acquisition. This sale of the shares will include the sale of the Group loans,

which will be subordinated on the Transaction’s Closing Date. The cession and pledge to the

Banks with regards to all the rights of the assets will be cancelled on the Transaction’s Closing

Date.

With the Company acquiring the 10 shares of Enzani Molene Holdings (Pty) Limited the

effective shareholding will increase to 78% of the Company.

J Kirsch 10 shares

Moorland Investments (Pty) Limited 10 shares

These shareholders may sell their shares depending on the requirements and decision of the

potential buyer.

With the Company acquiring the 10 shares of Enzani Molene Holdings (Pty) Limited the

effective shareholding will increase to 11% each of the Company.

The shareholders will therefore have to vote for the adoption of the plan in terms of S 152 (3)

of the Act.

No debt equity swap transaction is contemplated.

17 Conditions for the Business Rescue Plan to begin

The Business Rescue Plan will formally start once the plan is approved on a preliminary basis

in terms of S152 (2). It must be supported by the holders of more than 75% of the creditors

voting interest that voted and at least 50% of the independent creditors voting interests that

voted.

Once the plan is approved on a preliminary basis and as it alters the rights of all security

holders, the security holders must vote to adopt the proposed plan. This plan will be adopted

once the majority of security holders approve the plan. Majority is defined as more than 50%

of the votes.

The plan will be implemented from this date although various actions are currently being

undertaken by the Practitioner to support this plan.

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18 Circumstances for the Business Rescue Plan to end

The Business Rescue will end if the Business Rescue Plan is proposed and rejected and no

Affected Person or Affected Persons act to extend the Business Rescue Plan in the manner

contemplated in the Act.

The Business Rescue will end if the Business Rescue Plan is adopted and implemented and

the Business Rescue Practitioner has filed a notice of substantial implementation of the

Business Rescue Plan with the CIPC.

The Business Rescue Plan will be considered fully implemented once the following has

occurred;

Creditors have been paid in terms of this plan;

Shareholder transfers, rights transfers and shareholder liabilities have been fully

implemented and all loans subordinated;

Eskom matters have been resolved to reasonable status;

The Business Rescue will end if, as result of a court order, prior to adoption of the plan, the

Business Rescue process will be converted to liquidation proceedings.

46

BUSINESS RESCUE

ADMINISTRATION

Section D

47


19 Appointments and reports

Direct appointments

Qey West Finance Corporation (Pty) Limited.

RC Devereux

Appointed Senior Business Rescue Practitioner

Chartered Accountant South Africa and Senior Business Rescue Practitioner

Registered with South African Chartered Accountants Institute - Membership no 00135571

HJ Kruger

Bachelor of Science (Actuarial and Financial Mathematics) - University of Pretoria

Diploma in Insolvency Law and Practice - University of Pretoria

BR Jooste

Bachelor of Arts Marketing Communications

P Daly

Attorney and Principal at DMO Attorneys

Commercial and Business Rescue Attorney

CV Asset Management (Pty) Limited

C Verhoeven

Pr Eng. (mech)

M IngB B Ing (mech)

Management

JP Kirsch

Chief Executive Officer

BSc degree in Mechanical Engineering, (Wits)

48


BK Nathoo

Operations Director

National Higher Diploma in Higher Engineering

C von Eckardstein

Chief Financial Officer

Bachelor of Commence (Wits)

Bachelor of Accounting Science (Hon) (Unisa)

Chartered Accountant South Africa

Reports

During the Business Rescue Process the Practitioner has relied on various reports generated

by the following professional firms:

Evra Consulting

Evra is a planning and scheduling service provider as well as claims & dispute consultant. They

also offer a Forensic Delay Analysis service.

Creditors not reflected or late claims

Any claims that are received and adjudicated upon by the Business Rescue Practitioner prior to

the submission date, will be the annexed to the Annexure of creditors to reflect such persons for

purposes of participation at the meeting to determine the future of the Company and would

upon such acceptance constitute the voting interest of such Creditor.

If the claim of a creditor is received or adjudicated by the Business Rescue Practitioner after

submission date the creditor in question will have forfeited its right to participate in the meeting

to the extent of the value received or adjudicated after the submission date.

Creditors who, for whatever reason, have not as yet submitted their Claims to the Business

Rescue Practitioner prior to the deadline set to submit claims, will not be considered valid and

will not form part of the adopted Business Rescue Plan. These claims will be deemed to have

been forfeited against the Company.

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20 Dispute resolution

Save as provided for in S133 of the Act, in respect of all or any disputes by the Practitioner on

Claims submitted by Creditors, PCF Creditors and Employees, which disputes include, but are

not limited to, disputes on the existence or otherwise of Claims, on quantum of the Claim,

security claimed by a Creditor, the nature of the security, the extent and value of the security

and the like of such dispute can only be resolved in accordance with the dispute mechanism

outlined below.

The dispute mechanism procedure will be as follows:

All creditors who have received notification from the Practitioner of a dispute are within 15

days after the Additional Claims Period, to contact the Practitioner and to meet with him during

this period in an attempt to reach agreement on the dispute.

If the Creditor does not avail itself of this 15 day opportunity or if after having availed itself and

the dispute is not resolved within the 15 day period, the Creditor will be afforded 7 days

calculated from the date of expiry of the days15 days to nominate one of the Advocates from

the list below as an expert (not as an arbitrator or mediator) to preside over and to resolve the

dispute. Should the Creditor not make this nomination the Practitioner will do so on its behalf

and this nomination will be binding on the Creditor. The list of these advocates are:

N Cassam;

J. Suttner;

G Wickins;

The advocate when nominated and who agrees to accept such appointment (hereinafter

referred to as the “expert”) will endeavour to complete his mandate within 30 days of his

appointment or within such further time period as the expert in his sole discretion may

determine. To the extent that any expert as nominated by the Creditor or Employee

refuses to act or is not available to act, the Creditor or Employee, or if he refuses or does

not do so within three days of being requested by the Practitioner, the Practitioner is then

obliged to choose another advocate from the above list until one such advocate is

available to act and is agreeable to act

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The expert will in his sole and absolute discretion determine:

• the venue at which the dispute is to be resolved;

• the rules, regulations and procedures that will govern the determination of the dispute;

• the date for the determination of the dispute;

• will give his award and determination within 5 days of the completion of the process as

determined by him;

• will as part of his award and determination determine who is liable for the costs of the

determination such costs to include his costs, legal costs, venue costs, recording

equipment, transcript of evidence and the like.

The Creditor agrees that, save for any manifest error the determination of the expert will be

final and binding on the Creditor, the Company and the Practitioner and will not be subject to

any subsequent review or appeal.

The expert shall be entitled to make an award for costs in his reasonable discretion.

The Creditor, the Employee, the Company and the Practitioner agree to use their utmost

endeavours to ensure that the entire dispute is determined by the expert within the 30 day

period as set out above.

21 Ability to amend the Business Rescue Plan

21.1 Provided that any amendment shall not be prejudicial to any of the rights of the Affected

Persons or the Banks, the Practitioner shall have the ability, in his sole and absolute

discretion, to amend, modify or vary any provision of this Business Rescue Plan, provided that

at all times the Practitioner acts reasonably. The amendment will be deemed to take effect on

the date of written notice of the amendment to all Affected Persons.

21.2 Any amendments that are deemed to of a material nature will require an amendment to the

plan and this will be subject to a vote by creditors and will be subject to the conditions of S151

of the Act.

21.3 In the event of the failure of any condition precedent, alternatively in the event that an

unforeseen factual circumstance arises which prohibits the implementation of the Business

Rescue Plan the Business Rescue Practitioner reserves the right to be able to provide notice

of a further meeting of creditors and to reconvene the creditors meeting to discuss and if be

vote upon these circumstances.

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21.4 It is specifically recorded that the provisions of paragraph 9 shall mutatis mutandis apply to the

extension or reduction of any timeframes by the Practitioner.

22 Voting at the meeting

A meeting will be convened in terms of S151, at which the Practitioner will:

Introduce the proposed Business Rescue plan for consideration by the creditors and if

applicable, by the shareholders;

Inform the meeting whether the Practitioner continues to believe that there is a reasonable

prospect of the Company being Rescued;

Provide an opportunity for the employees’ representatives to address the meeting;

Invite discussion, and entertain and conduct a vote, on any motions to;

Amend the proposed plan, in any manner moved and seconded by holders of creditors’ voting

interests, and satisfactory to the Practitioner or:

Direct the Practitioner to adjourn the meeting in order to revise the plan for further

consideration; and Practitioner; or

Call for a vote for to approve or disapprove the adoption of the proposed plan.

The Voting Form and Proxy form will be distributed with the Notice to attend the meeting as

well as the requirements for affected parties to vote.

23 Practitioners Remuneration

The effective date of the letter of Engagement is 14 February 2019 and continues until the Business

Rescue Process is substantially implemented, or when the Company is placed into liquidation.

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The letter of engagements sets out the responsibilities of the Practitioner, the Directors and the

Company and encompasses a confidentiality agreement as well as addendums. The

remuneration contract between the Practitioner and the Company is attached as Annexure E and

is summarised as follows:

Fees are based on the prescribed rates for a large sized Company based on their Public Interest

Score. The Company has a Public Interest Score of 757 which classifies it as large sized Business.

Fees are payable weekly as prescribed by the Act;

Mr RC Devereux: R 2 000-00 per hour up to a maximum of R 25 000-00 per day;

Mr HJ Kruger: R 1 000-00 per hour;

Mr BR Jooste: R 800-00 per hour;

A contingency fee is payable as follows upon the successful implementation of the Business Rescue

Plan:

The Company agrees to pay a contingency fee to the Practitioner as detailed (exclusive of VAT) as

provided for in section 143 of the Act and it is payable once the claim of Eskom is paid to the

Company. An amount of 4% of the successful gross Eskom claim paid out to the Company should that

amount be lower than R100 million and an amount of 6% should the claim be more than R100 million.”

The amount is payable as follows;

50% of the fee payable upon payment of the claim by Eskom and the balance once the plan is

substantially implemented and the Company is taken of business rescue.

Should there be no claim from Eskom or a claim lower than R3 million and the plan is

substantially implemented, and the Company is taken of business rescue the Practitioner will be

entitled to a contingency fee of R3 million.

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ANNEXURE A

SUMMARY OF CREDITORS

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ANNEXURE B

ASSETS VALUATION CERTIFICATE

A detailed list of assets is available upon request

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ANNEXURE C

PROJECTED FINANCIAL MODELS

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ANNEXURE D

LIQUIDATION AND DISTRIBUTION ACCOUNT

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ANNEXURE E

PRATITIONERS REMUNERATION

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