Sharemax offers investors a “haircut”

Sharemax investors are being offered the choice between receiving a monthly income for their investment in the company or being repaid part of the money that they have invested in a full and final settlement agreement.

About 40 000 investors have put more than R4,5-billion into the property syndication company. The Sharemax board has proposed that a scheme of arrangement and an offer of compromise is negotiated with investors.

In September last year Sharemax defaulted on monthly interest payment to investors and this led to the company being investigated and statutory managers being appointed to run the scheme which appeared to be operating in contravention of the Banks Act.

Spokesman for the company, Dawie Roodt confirmed that some of the companies in the Sharemax portfolio were "definitely bankrupt" and said that the amount owed to investors by some of the companies exceeded the value of assets owned by the company.

He did not say which of the companies was bankrupt.

He says that the R3,5-billion The Villa shopping centre, south east of Pretoria is one of the developments that is bankrupt and Roodt says that one of the advantages of liquidation of the bankrupt businesses is that certain investigations could be conducted and those at fault identified.

However, he adds that liquidation would not be in the interests of the investors.

He says the new board of Sharemax has been granted permission by the High Court to seek the approval of investors in Zambezi Retail Park and The Villa to outline details of an income plan scheme as part of a scheme of arrangement and offer of compromise. The dates for these meetings have not yet been finalised.

Roodt says that the reason for this is that the board is still considering alternatives that might provide a better solution for the investors but would not say what these alternatives are.

He says that the board wants to give existing investors the option of staying in the syndication and riding out the tough times or getting out of it now and "taking a haircut" – a reference to getting back less money than originally invested.

He says that investors in The Villa will not be repaid the full amount of their investment.