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Tuesday, April 23, 2002 - Web posted at 9:47:37 pm GMT Michelle backs move to liquidate loan firmWERNER MENGESFORMER Miss Universe Michelle McLean is backing a bid to wind up a money -lending company which has provided much of the funding for her children's charity. The Michelle McLean Children Trust is a minority shareholder in small loans company Finance in Education (FinEd), which is the target of a liquidation bid launched by another minority shareholder, Danie Botes. The looming court battle over the future of FinEd, which is alleged to have earned its minority shareholders millions of dollars, was yesterday postponed to Friday. The curator of South Africa's troubled Saambou Bank, which is FinEd's majority shareholder, has accused Botes of trying to take control of the company through the High Court case. Botes's application, which could result in one of the largest liquidations yet in Namibia, was postponed to give all parties more time to prepare for the hearing. Some N$368 million in loans advanced through FinEd remain to be paid back, with public service officials accounting for most of the about 40 000 loans channelled through the company. The bid by Botes, who owns 20 per cent of the shares in FinEd and is the Managing Director of both FinEd and of its other minority shareholder, the Michelle McLean Children Trust, is being supported by McLean. The former Miss Universe turned television presenter and philanthropist informed the High Court in an affidavit backing Botes's legal action that the placing of FinEd in liquidation would be in the company's best interest. McLean founded the children's trust which now owns 20 per cent of FinEd. FinEd's majority shareholder with 60 per cent of the shareholding, the troubled South African Saambou Bank, is however set to oppose the winding-up. Accusations over the claimed difficulty FinEd is said to find itself in are flying to and fro in papers filed as part of the liquidation application. Saambou was placed under a curatorship that was forced by a cash-flow squeeze in early February. The bank's curator, John Louw, states in an affidavit that FinEd remains a solvent company and alleges that Botes's application was lodged with an ulterior motive - in effect to wriggle out of the shareholding partnership by removing Saambou as a shareholder in FinEd and paying it as little as possible in the process. Botes has earned some N$6,5 million from FinEd, Louw claims, and the Trust some N$6,7 million. But according to Botes, a decision by Louw in February to cut off all further funding to FinEd, which would have been used for the granting of new loans, effectively halted all FinEd's new business. Without this, the company cannot continue to pay its overheads - about N$224 000 a month, he said. Saambou's repudiation of its obligations under the FinEd shareholders' agreement "effectively destroyed the core business" of the company, he charged. FinEd makes its money by taking a cut out of the interest earned on the loans Saambou has advanced through FinEd. In turn, the Michelle McLean Children Trust also derives money, which it uses to fund heart operations for children, the building of schools, the upgrading of school teachers' qualifications and the like, through the same process. The interest on these loans is fixed at the prime bank lending rate plus 10 per cent, with Saambou and FinEd each set to get a share of that 10 per cent, according to Botes. According to Louw the interest can be even more, with prime plus 10 the lowest lending rate. Botes informed the court that FinEd's future income-earning potential has now effectively been eradicated, particularly because the bulk of the outstanding debts on its books are made up of the capital portion of loans, on which Fined is not set to earn any dividend. The interest portion of these loans, which FinEd would make its money from, had already been repaid, and without a resumption of a provision of loan capital from Saambou as in the past, FinEd would have no hope of receiving such dividends from administering the collection of the Saambou loans. Since FinEd can no longer function as a commercially viable concern, Botes states, it would be best if its business and the collection of its outstanding debts are placed urgently in the hands of a liquidator in order to finalise its affairs. Louw countered, though, that FinEd is still solvent and that Botes and the Trust will earn a substantial income if the company continues doing business. The future of FinEd is now in the hands of Botes, Louw charges. Botes has an offer from Saambou before him, and if he accepts it, FinEd's business can continue as it ordinarily has, and Botes, Saambou and the Trust will all continue to earn an income, and the Trust will be able to continue with its welfare work, the curator claims in his statement. |
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