Author: Julius Cobbett
Date Published: 05 July 2012
Argument over unlisted pref shares failing to pay their 15% coupon.
A war of words has erupted over the failure of unlisted public company SA Superalloys to pay dividends on its preference shares. The shares were sold to various investors by Herman Pretorius, who recently featured on Moneyweb for his unorthodox investment vehicle, the Relative Value Arbitrage Fund (RVAF).
In the article, Moneyweb noted that the RVAF had reported consistent returns of about 20% a year for the past five years, but that there is no obvious way to verify this performance. The RVAF does not appear to have an auditor or third party administrator, and Pretorius is not licenced with the FSB.
Many of the RVAF’s investors also hold preference shares in SA Superalloys. There are about 500 preference shareholders, mostly from Cape-based farming communities, who have invested roughly R140m into SA Superalloys.
Moneyweb can reveal that Herman Pretorius has personally lent about R40m to SA Superalloys so that it could afford to pay generous dividends to its preference shareholders.
However, the dividends ran dry this year, which has sparked some unhappiness among investors.
The SA Superalloys shares were sold by Pretorius and brokers affiliated to him as far back as 2006.
SA Superalloys is a 55% shareholder in Avalloy, a Pelindaba-based manufacturer of special alloys for, among others, the aerospace and power turbine industries.