A cash injection of R80-million promised to the Eastern Province Rugby Union (EPRU) by a mystery sponsor saved the beleaguered franchise from final liquidation yesterday.
As EPRU was given another lifeline, with proceedings postponed to May 31 for it to apply for business rescue, roleplayers remained tight-lipped about where the money was coming from.
Asking the Port Elizabeth High Court for a three-week indulgence in order to file papers for business rescue, EP Kings boss Cheeky Watson said R20-million had already been secured from the investor as a token of good faith.
Watson said in an affidavit that EPRU’s administrator, the SA Rugby Union (Saru), had secured a prospective investor who was willing to grant post-commencement finance to EPRU in terms of Section 135 of the Companies Act.
He said of these funds, R20-million had already been paid into the bank account of EPRU’s attorney, Paul Bester, with the rest to be paid over the remainder of the Super Rugby season.
Thirty-six professional rugby players took EPRU to court, claiming they were owed more than R18-million in salary arrears and other benefits.
They wanted EPRU to be wound up and a liquidator appointed so debts could be settled.
While lawyer Craig Jessop, who appeared for some of the players, eventually agreed to the postponement, he remained sceptical.
“While the players welcome the investment as a positive development, they still have no idea as to what the business plans are,” Jessop said.
“Keep in mind if the application for business rescue is nothing more than a damp squib and simply going to prolong the agony, then there will be no point.”
In March the court placed EPRU under provisional liquidation with an opportunity to come up with the funds before yesterday, or face final liquidation.
Yesterday, however, Watson said EPRU had changed course, with plans now under way for business rescue.
“The deposit was secured after intense negotiations during the course of last week and consultations between Mr Bester, Saru and the investor,” Watson said.
“As a token of good faith and through the facilitation of Saru, the aforesaid R20-million was paid into the trust account in order to be incorporated into a rescue plan.”
Watson said these funds were not only available to pay creditors, but had been made available as post-commencement finance to rescue the company.
He said the investor would contribute a total of R80-million over the remaining Super Rugby period.
“There are several conditions attached to the payment of the funds which will eventually crystallise in a plan to be presented.
“Such conditions are complex and consist of sponsorship deals, obtaining shareholding and concluding several other agreements, which is the incorporation of the franchise into the .”
Watson said the alternative to a postponement – EPRU being liquidated – would be devastating to the province.
“With the final liquidation thereof, all administrative functions of rugby in the Eastern Cape will cease, alternatively they will have to fall back into the hands of the union as administered by Saru.
“This is an enormous task to immediately and during a season simply start up the operating machinery.”
With the liquidation of EPRU, Watson said its revenue stream would also be negatively affected as its only source of income was in respect of TV rights.
Jessop said a number of the players were frustrated by the process.
“But we will approach this with an open mind,” he said.
Liquidation proceedings were postponed to May 31, with an order for papers for business rescue to be filed by May 24. — kimberleyk@timesmedia.co.za
R80m promise from mystery sponsor stalls EPRU’s liquidation
As EPRU was given another lifeline, with proceedings postponed to May 31 for it to apply for business rescue, roleplayers remained tight-lipped about where the money was coming from.
Asking the Port Elizabeth High Court for a three-week indulgence in order to file papers for business rescue, EP Kings boss Cheeky Watson said R20-million had already been secured from the investor as a token of good faith.
Watson said in an affidavit that EPRU’s administrator, the SA Rugby Union (Saru), had secured a prospective investor who was willing to grant post-commencement finance to EPRU in terms of Section 135 of the Companies Act.
He said of these funds, R20-million had already been paid into the bank account of EPRU’s attorney, Paul Bester, with the rest to be paid over the remainder of the Super Rugby season.
Thirty-six professional rugby players took EPRU to court, claiming they were owed more than R18-million in salary arrears and other benefits.
They wanted EPRU to be wound up and a liquidator appointed so debts could be settled.
While lawyer Craig Jessop, who appeared for some of the players, eventually agreed to the postponement, he remained sceptical.
“While the players welcome the investment as a positive development, they still have no idea as to what the business plans are,” Jessop said.
“Keep in mind if the application for business rescue is nothing more than a damp squib and simply going to prolong the agony, then there will be no point.”
In March the court placed EPRU under provisional liquidation with an opportunity to come up with the funds before yesterday, or face final liquidation.
Yesterday, however, Watson said EPRU had changed course, with plans now under way for business rescue.
“The deposit was secured after intense negotiations during the course of last week and consultations between Mr Bester, Saru and the investor,” Watson said.
“As a token of good faith and through the facilitation of Saru, the aforesaid R20-million was paid into the trust account in order to be incorporated into a rescue plan.”
Watson said these funds were not only available to pay creditors, but had been made available as post-commencement finance to rescue the company.
He said the investor would contribute a total of R80-million over the remaining Super Rugby period.
“There are several conditions attached to the payment of the funds which will eventually crystallise in a plan to be presented.
“Such conditions are complex and consist of sponsorship deals, obtaining shareholding and concluding several other agreements, which is the incorporation of the franchise into the .”
Watson said the alternative to a postponement – EPRU being liquidated – would be devastating to the province.
“With the final liquidation thereof, all administrative functions of rugby in the Eastern Cape will cease, alternatively they will have to fall back into the hands of the union as administered by Saru.
“This is an enormous task to immediately and during a season simply start up the operating machinery.”
With the liquidation of EPRU, Watson said its revenue stream would also be negatively affected as its only source of income was in respect of TV rights.
Jessop said a number of the players were frustrated by the process.
“But we will approach this with an open mind,” he said.
Liquidation proceedings were postponed to May 31, with an order for papers for business rescue to be filed by May 24. — kimberleyk@timesmedia.co.za
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending Now
Latest Videos