Afristrat Investment Holdings Set for Liquidation Amid Insolvency Woes

The Johannesburg Stock Exchange (JSE)-suspended Afristrat Investment Holdings has announced its liquidation after recognizing its state of commercial insolvency. The decision, taken by the board on March 1, 2024, was necessitated due to the company's inability to pay its debts and failings under the solvency and liquidity tests as defined by South Africa's Companies Act.

This significant move comes in the wake of a dismissal by Judge Gregory Ally in the High Court in Pretoria of an urgent application by minority shareholder Jienie-Michelle Dreyer to provisionally liquidate the company on February 20, 2024. Despite this setback for Dreyer, the board itself acknowledged just days later the need for an orderly liquidation.

Additionally, Afristrat is embroiled with creditor issues, particularly Change The Conversation Digital, which is pursuing the company for an unpaid debt of R433,000. This unresolved financial dispute adds to the pressure leading to liquidation proceedings.

Afristrat's financial troubles became evident when it could not proceed with its restructuring initiatives, primarily due to its suspension from JSE and the ongoing liquidation proceedings. The company had forecast returning to commercial health once their JSE suspension was lifted and after a ruling was made regarding Dreyer's liquidation application. The future of restructuring offers to security holders remains uncertain, largely affected by the company's announcement to wind up its business.

Shareholders were previously informed that Afristrat lacked the capacity to continue as a going concern and that the company was not viable for business rescue. The company, formerly known as Ecsponent, had published its last comprehensive financial results for the fiscal year ending in March 2021. This lack of up-to-date audited financial statements raised concerns among shareholders and regulatory bodies like the JSE, leading to the suspension of the company's shares in August 2022.

Following the resignation of their external auditor, Nexia SAB&T, in August 2022, Afristrat has been unsuccessful in securing a new auditor—a mandatory requirement unfulfilled past its deadline. The absence of a standing auditor further complicated the company's restructuring and reporting efforts. CEO George Manyere's explanation that the appointment of new auditors was hindered due to the ongoing liquidation efforts by a minority shareholder did little to alleviate the situation.

Furthermore, despite the board's decision to liquidate, Dreyer plans to proceed with appealing the court's decision against her liquidation application. Her next steps, along with those of other betrothed investors, may influence the unfolding events as Afristrat progresses with its own liquidation process.

Afristrat's investments have seen significant losses, especially the R1.5 billion stakes in MyBucks SA, which experienced a downfall leading to its liquidation. Afristrat's attempt to recover R800 million through a claim against MyBucks remains unsettled, casting doubts over the recovery of any substantial funds for creditors and investors.

As Afristrat prepares to cease operations, stakeholders are caught in an uncertain and precarious situation, awaiting the outcome of legal proceedings and seeking clarity on the recovery of their investments. The final fate of Afristrat will soon unfold in the chapters of South Africa's corporate history.