Rugby

Remgro quitting WP Rugby ‘an excuse’

2017-08-08 10:59
Aerios CEO Costas Constantinou (Supplied)

Cape Town - Aerios, the company at the centre of a multimillion-rand dispute with WP Rugby over advertising rights deals - their damages claim now stands at a staggering R276m - says Remgro withdrawing their financial support at Newlands represents “failure to tell the whole story”.

READ: Remgro pull-out: WP's Wakefield speaks

The powerful investment company backers of WP confirmed late last week, through CEO Jannie Durand, that they would not be converting loans to the union into stake-holding, and would seek payback as a result of some R40m which helped pay staff and player salaries during the much-publicised cash crisis last year.

But Aerios’s own chief executive, Costas Constantinou, told Sport24 on Monday that there was “more to” Remgro’s pull-out, coming as it did fewer than three weeks before a Section 417 insolvency inquiry scheduled for August 24, and to be presided over by retired High Court Judge Eberhard Bertelsmann.

“I believe there is more to Remgro pulling its R40m from WP Rugby, and that Jannie Durand is not telling the full story ... (he) is well aware of our damages claim.”

A Section 417 is an inquiry into the affairs of a bankrupt company; business wing WP Rugby (Pty) Ltd was controversially liquidated late last year and a new entity owned by the union - backed by Remgro - effectively bought the liquidated company.

Subpoenas have been served on the directors of WP Rugby and Aerios say more may follow, depending on evidence which comes to light in the probe.

Durand, however, has hit back, saying that Remgro are “offended by the baseless allegations of insincerity and dishonesty”. 

At the time of the liquidation, Constantinou said it amounted to a “fraudulent plot” to try to cancel their contractual agreement; Aerios accused WP of reneging on an advertising rights contract for exclusive rights to sell stadium space and later to install Wi-Fi and digitise Newlands in exchange for content rights.

Late last week, Durand said Remgro - who were earmarked for a 49 percent initial stake in the new WP entity - were withdrawing because they had problems with the South African Rugby Union (SARU) model for franchises going forward, and certain stipulations associated with stake-holding.

According to Constantinou, Durand is “clearly trying to get as far away as possible from what will be uncovered in the inquiry ... I believe the inquiry will uncover nefarious activities from quite a few parties involved in the liquidation”.

He added: “I believe Durand didn’t anticipate that we would go to these lengths to uncover the truth ... Remgro realise that they cannot undo their role in engineering this liquidation, and will be fearful of what will be uncovered in the inquiry, so they are trying to put some distance between themselves and WPRU until after the inquiry takes place.

“To do this, they are using SARU regulations as an excuse ... a red herring.”

Constantinou said the liquidation had been a “deeply flawed” process.

“(Auditors) PwC found the assets to be worth R8.5m.  (But) no intangible assets were included - sponsorship deals, player contracts, advertising contracts. How is it possible to leave such assets off a valuation?

“We have done our own valuation including tangible assets, which values the assets at over R150m.

“Remgro was loaning money to WP well before the liquidation, and also well before there was even a SARU presidents’ general council meeting to vote on the increase in private franchise ownership to 74.5 percent: this again points to this divorce having nothing to do with SARU.

“(They) want R40m and we have a damages claim of R276m ... combined, that is R316m. However, (WPRU president) Thelo Wakefield continues to deny that WP Rugby is in serious trouble, and states instead that it is business as usual. Clearly this cannot be the case with so many claims hanging over them.

“I will leave no stone unturned ... I have faith in the inquiry process and am confident that honesty and integrity will prevail.”

In a statement in response, Durand said: “The allegations made by Aerios were raised in their appeal against the liquidation of Western Province Rugby (WPR) as heard by the Cape High Court in December 2016. The court ruled against them in this instance and they chose not to appeal the decision.

“The fact of the matter is that the shareholders of WPR found themselves with an insolvent WPR in October 2016.  After considering various options (including business rescue) they opted to liquidate the company to avoid insolvent trading.

“Remgro does not intend to respond to all the detailed allegations made by Aerios except to state that the liquidation process and our dealings with WPRFU were all conducted in an honest and legitimate manner.

“We are offended by the baseless allegations of insincerity and dishonesty.  It is noteworthy that according to Aerios’s version every stakeholder involved in the liquidation process seems to have been plotting against them, including independent third parties like the judge, PwC and the liquidator.

“Remgro is aware of the Section 417 inquiry and will co-operate with the process to the extent that we are required to do so.

“We confirm that our decision not to pursue an investment opportunity in the new commercial arm of WPR is informed by changes in the professional rugby environment and the regulations governing it.

“As a JSE-listed company with significant investors like pension funds and collective investment schemes, Remgro was simply unable to justify the continued pursuit of this opportunity.”

*Follow our chief writer on Twitter: @RobHouwing

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