High drama in TopTV saga
Former TopTV boss Vino Govender and six other directors of First National Media Investment Holdings, a founding shareholder in the pay-television platform’s parent company, On Digital Media, have provided an undertaking to resign after being given an ultimatum by the Industrial Development Corp to step down. By Duncan McLeod.
Vino Govender, the former CEO of On Digital Media (ODM), which operates DStv rival TopTV, has agreed to resign as director and CEO of First National Media Investment Holdings (FNMIH), one of the pay-television operator’s founding shareholders, after an ultimatum from the Industrial Development Corp (IDC) to do so.
Govender could not be reached on his mobile phone on Monday for comment, but Karabo Motshwane, a senior associate at Werksmans Attorneys, on behalf of the IDC, told TechCentral that Govender and six fellow directors had provided a written undertaking that they would step down from the board of FNMIH.
At the same time, the IDC has won a high court case it brought against two other investors in ODM, Red Gold Investments and First AOne Trade & Invest. A default judgment was granted in the IDC’s favour after the two shareholders decided not to defend the action in court.
It was also suing FNMIH, with a summary judgment application set to be heard on 6 November. This application would now be removed from the court roll pending the formal exit of the directors.
Prior to the implementation of a new ODM shareholders’ agreement, FNMIH, First AOne and Red Gold Investments together held a combined 58,9% of the pay-TV operator’s equity. Red Gold is backed by Cosatu, while First AOne enjoys the backing of black-owned Lereko Investments.
The IDC had also instituted proceedings against FNMIH, seeking R293m, and saying a further 12 individuals, trusts and companies invested in the company had provided guarantees against this debt. It was suing First AOne for R161,8m and it wanted a further R297,3m from Red Gold Investments.
In total, it was suing for R752,8m, seeking repayment of loans made before ODM was placed into business rescue last year.
In letters dated 29 October — and attached to an answering affidavit in a separate high court application brought by FNMIH and fellow ODM shareholder Mergan Moodley against the broadcaster and its business rescue practitioner, Peter van den Steen — the IDC demanded that Govender and other FNMIH directors fall on their swords.
It gave them until 31 October to respond or face further action.
Meanwhile, the FNMIH and Moodley action, filed at the high court in Johannesburg and brought on an urgent basis, has since been withdrawn. They had sought to interdict and prevent Van den Steen from taking steps to implement the business rescue plan.
“The only issue outstanding in the urgent application is that of the liability for ODM’s legal costs arising from the withdrawal of the claims. Judgment on this issue has been reserved to 10am on Monday, 11 November,” ODM said.
The IDC said in the letters attached to Van den Steen’s answering affidavit that it had “exercised its right” to take over all of the ordinary shares in FNMIH at “fair value”. These shares were “ceded and pledged” to the IDC in terms of an agreement with FNMIH’s shareholders. Werksman’s Motshwane said an independent accountant would now be appointed determine FNMIH’s fair value.
In a letter specifically addressed to Govender, the IDC — through Werksmans — said: “We are instructed to advise you, which we hereby do, that our client [the IDC] is exercising its rights as a shareholder in terms of section 71 of the Companies Act, and intends to have you removed as a director of FNMIH at a properly convened meeting of shareholders of FNMIH.”
In a letter addressed to the FNMIH board, the IDC said it “does not have faith” in the ability of the directors to conduct the company’s affairs in either company’s best interests.
Govender was founding CEO of ODM and led the launch of TopTV. He resigned suddenly in February 2012. ODM chairman Eddie Mbalo has filled the CEO role in an interim capacity since then, but will step down soon to make way for an appointee from ODM’s new shareholder, China’s StarTimes.
StarTimes is acquiring a 20% stake in ODM — although its economic interest in the business will be 65% — while FNMIH, First AOne and Red Gold’s combined stake is set to be diluted to 15%.
International companies are prevented under South African law from owning more than 20% of a local broadcaster’s equity.
Van den Steen said the business rescue process would have taken only a few months to conclude, instead of the more than 12 months it has taken so far, if the Broadcasting Act hadn’t barred StarTimes from acquiring more than 20% of ODM’s equity.
TopTV is set to be relaunched as StarSat on 1 December. — (c) 2013 NewsCentral Media