Inside how Pula Steel creditors, liquidator rejected the Verma family

11 Aug 2019

BY VICTOR BAATWENG

Efforts by Deepak Verma – a representative of the Verma family who conceptualized the liquidated Selebi Phikwe based steel manufacturing company – Pula Steel Casting and Manufacturers (Pty) Limited to buy back the company seems to be proving futile.

This week, Pula Steel creditors rejected the family’s bid to buy the liquidated company assets and in-turn agreed with a recommendation by the liquidator – John Hinchliffe to sell them to another bidder – DH Machine Manufacturing Limited.

Through family company known as Wealth Key Trading (Pty) Limited, the Vermas had made an initial bid of P14 million for the Pula Steel assets whilst their only competitor – DH Manufacturing offered P21 million.

In a letter addressed to the creditors on the eve of a meeting that was held on the 6th of August 2019, the liquidator made it very clear to them that his preference between the two bidders - Wealth Key (Pty) Limited and – DH Manufacturers was the latter.

“I am therefore, as liquidator also recommending to the creditors that the assets be sold to DH. I believe this will be in the best interests of creditors”, Hinchliffe said in a letter dated 02 August 2019.

He also added that the DH offer compares reasonably well to a valuation which was carried out in August 2018 which the assets that DH had offered to purchase were valued at approximately 29 million in total.

In its latest bid, DH made an offer which comprised of Plant and Buildings (P18 million) and Rolling Mill components (P3 million). The Rolling Mill was earlier this year added to the assets to be sold after the High Court gave a go-ahead.

UNSUCCESSFUL BID

This past week, Wealth Key Trading (Pty) Limited front man – Deepak made last minute attempt to re-claim what his family believes is theirs. On the eve of the Tuesday meeting of the creditors and the liquidators, Deepak – who doubles as a creditor and bidder is reported to have submitted another offer to the liquidator pegged at P22 million. This translate to an extra P1 million that the creditors would have received for the company’s assets from another bidder – DH. While Deepak’s P22 million offer (made Monday evening) is more lucrative than that of DH’s P21 million, creditors rejected it on the ground that it was “inside trading”. One creditor went as far as accusing Deepak of using inside information to try and manipulate the tendering process.

“The guy received the liquidators report which shed light on bids made. He then realized that his competitor had made a better offer, that is why he then rushed last night to make another offer which is a little higher than that of DH. That is against fair competition rules”, said an insider who was part of the Tuesday meeting between the creditors and the liquidator.

Before he was rejected Deepak had pleaded with creditors to allow him to buy the assets adding that together with his family, they conceptualized the Pula Steel business idea. He also questioned the liquidator’s way of handling the first tender accusing him of many irregularities.

“We started in the cloth manufacturing business and decided to diversify to steel manufacturing. That’s how Pula Steel was born”, Deepak told the Master of the High Court and other creditors in the capital Gaborone on Tuesday.

Despite the plea, when voting time came, all the creditors including state owned – CEDA, GABCON, BPC and BURS voted against allowing Wealth Key Trading (Pty) Limited’s latest P22 million to be accepted as part of the private treaty.

The meeting was then closed with some creditors calling on the liquidator to speed up the process of selling the assets to DH as they fear is that they might be losing value.

As for Deepak and his family they await legal counsel on whether to take the matter to court or not. He said there is need for the Court to be informed about the many irregularities that he says happened during the first tender.