MKM properties sold for M115m

MKM properties sold for M115m

MASERU – THREE buildings belonging to MKM were surreptitiously sold for M115 million in a private auction that has now triggered violence from the company’s irate creditors, thepost can reveal. News of the sale came last week after a mob of MKM creditors invaded the three buildings, harassing tenants, damaging property and demanding that they be paid the rentals.

At that time the creditors did not know who had bought the buildings and for how much. Now thepost can reveal the exact purchase prices and the identity of the buyers. The sale happened in May last year at a private auction to which not more than six potential buyers were invited. The auction was not advertised in local media as is the norm.

thepost has seen the list of those who were at the auction but will not reveal some of their names because it has not independently verified their attendance and their confirmation has not been sought.  It is however clear that the auctioneer and the liquidators had their sights on some of the wealthiest people in the country. The discreet nature of the auction could also indicate that the liquidators were anxious to avoid the drama that led to the cancellation of the initial auction in 2014.

At that auction a group of MKM creditors assaulted Stefan Carl Buys, the convener of the auction, accusing him of trying to sell off their properties to foreigners on the cheap. This time calls and emails were sent to just a handful of businessmen who the liquidators were sure to be interested and had the financial means to fork out the millions required to buy the prime properties.

Neither MKM’s directors nor its legal representatives were at the auction. Also, they were never informed of the result of the auction.
Simon Thebe-ea-Khale and Mothofeela Ramakatsa, MKM directors, say they did not know how much was paid for the buildings.
Investigations by this paper have revealed that the former Agric Bank building, along the Kingsway opposite Queen Elizabeth II Hospital, and in which FNB Lesotho is the main tenant, was bought for M58 million.

The buyer was Sekhametsi Investment Consortium, a venture capital company with interests in several businesses in the country.
The new and yet to be occupied building opposite Pioneer garage and next to Sparrows Bar was bought for M43 million by Executive Transport, a haulage company.

Executive Transport also paid M14 million for the dilapidated building opposite Selkol along Moshoeshoe Road. The building used to house a Nissan Motors dealership. Sekhametsi confirmed in a statement on Tuesday that it had bought the former Agric Bank building. The company said it owned the building “as per Deed of Transfer № 40265 dated 4th May, 2017”.

The company said it bought the building for M44 million, excluding stamp duties, transfer costs, seller’s commission and VAT”.
“In fact the total costs paid by (the company) for the acquisition of former Agric Bank Building is in excess of M58 million,” the statement reads.
But Sekhametsi said it regrets that the transaction is now the subject of a protest from MKM creditors.

It said it was worried that the deal “has become a public contention and part of protest action by entities and individuals that believe they were negatively impacted by the long standing Star Lion Group Limited in liquidation process, which was subject to a long running litigation from 2012”.
These protests however do not change the fact the building now belongs to Sekhametsi, the company said.

Sekhametsi director Matjato Moteane, told this paper that they have no problem with those complaining “as long as they don’t harass tenants at our building”. “They may have rights to complain and seek intervention from any rightful authorities but they should leave our tenants alone,” Moteane said.

Sekhametsi appealed to anybody “who may unwittingly be involved in the above protest action to respect its rights and exercise due caution as well as avoiding disturbance to the tenants of former Agric Bank Building and their customers”. Executive Transport chief executive, Lebona Lephema, refused to confirm buying the buildings. He referred questions to his lawyers Webber Newdigate.

“I cannot comment lest I jeopardise my case against this mob that has damaged our property,” Lephema said. “I have already engaged the police in this (the invasion) and I don’t think this is a proper time to talk.” Webber Newdigate, which was also involved in the liquidation, referred questions to local Attorney, Qhalehang Letsika, and Chavonnes Cooper, a liquidator from South Africa.

Letsika who was involved in the liquidation confirmed the sale but said he could not give exact details because he was out of his office. Cooper said he was not in his office because it was a public holiday in South Africa. Both men were working on the liquidation with lawyer DG Roberts who died a few weeks ago. The Master of the High Court said she could not comment because she was on leave. Ramakatsa told thepost yesterday that “even we as the directors of the purported company in liquidation were not aware of the auction of the properties”.

“This is totally against the law,” Ramakatsa said. “An auction should be conducted in public. We learnt that selected companies were advised to submit their offers and those that offered better prices were given the chance to buy the buildings.”

A defiant Thebe-ea-Khale said as far as he is concerned he still owns the buildings because he has the leases. thepost has been told that three other MKM properties will be put on the market soon.  What angered the creditors that invaded the properties last week is that they have not received a cent even after the liquidators have sold the buildings.

The Central Bank of Lesotho closed MKM in 2007 after a PricewaterhouseCoopers investigation declared the company a Ponzi scheme. The investigation revealed that the company owed creditors M400 million but its assets were worth about M100 million in assets. Its assets included buildings, some land and a fleet of cars that were however registered in Thebe-ea-Khale’s name.  As depositors took flight and deposits dried up MKM began to crumble. In the end nearly 400 000 Basotho, including then Prime Minister Pakalitha Mosisili, lost their monies.

Since then the company has launched spirited court battles to block its liquidation. Those cases, including those launched by proxies and creditors, have come to naught. The liquidators have also been trying to fend off what might amount to ambush suits from creditors who want to block the process.

MKM has a pending Court of Appeal case challenging the liquidation, according to Ramakatsa. After the last week’s fiasco at the buildings Prime Minister Thomas Thabane has entered the fray in a ditch to solve what many have considered a hot potato issue because of the amounts of money and number of people involved.

Thabane is reported to have instructed Attorney General Haae Phoofolo to help resolve the saga. Now that M115 million has been raised from the sale of MKM buildings creditors can ask a number of legitimate questions. Why haven’t the liquidators announced how much they have raised so far?

Why haven’t they called a creditors’ meeting to announce when they are going to start distributing what has been raised? Why were creditors not told of the sale a year after it was completed? When will the verification of the list of creditors be done? And most importantly, when do the liquidators plan to pay the creditors?

Staff Reporter

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