De Wet Potgieter
Moves are under way to liquidate the Golden Lions Rugby Union after IT billionaire Robert Gumede launched papers to recover millions owed to him by the Currie Cup champions.
In court papers filed in the South Gauteng High Court Deon van der Walt, the corporate finance executive for Gumede’s Guma Group, reads in part: “The object of the application is to bring about the winding-up of the respondent (Ellis Park Stadium which owns the Lions) on the grounds that it is unable to pay its debts.”
The recent success of the Lions on the field appears not to have been matched by its administrators, who stand accused of racking up huge debts of about R70m.
Court documents filed this week reveal that the Lions’ auditors, PricewaterhouseCoopers, wrote in May 2010 that the ability of the company to continue as a going concern depended on its ability to return to profitability.
Van der Walt included the financial figures for the 2007 to 2010 financial years, describing it as a “dramatic and continuing decline in the factual solvency”.
The Golden Lions’ financial woes have spiralled since 2007 when the company’s total liabilities exceeded its total assets as follows:• 2007: R48.6m;• 2008: R49.6m;• 2009: R63.7m;• 2010: R73.9m.
The rugby union’s financial situation is said to have deteriorated even further since then and, according to Van der Walt, the rugby union approached Absa Bank in October 2010 with a request to extend the terms of repayment of its overdraft.
“Absa was only willing to extend the period subject to the applicants’ (Guma TAC) providing a letter of undertaking to confirm future funding.”
He also refers to an email dated February 15, 2011, that indicated at the time that the Lions had no funding to cover the costs of last year’s opening match in the Super Rugby tournament at Ellis Park against the Bulls.
This was in fact a few days before the kick-off at Ellis Park and the Lions had no money to pay the master of ceremonies, the dancers and other entertainers, Van der Walt stated in his court papers.
However, Lions president Kevin de Klerk has disputed he claims and insists the club was financially sound and was not facing possible liquidation. Earlier this month, De Klerk said: “You can only be liquidated if your debts exceed your assets and I can say truthfully that is not the case (with the GLRU).
“Our assets exceed our debts considerably and we also have Altmann (Allers, the owner of Glasfit and GLRU deputy president) who has stepped in as our new equity partner. He has already invested substantially in the GLRU.”
According to Van der Walt’s statement, Guma TAC made it possible for the Lions to become the 2011 Currie Cup champions. As part of the agreement for 49% shares in the rugby union, R171000 was paid as part of the salary for the New Zealand conditioning coach, Wayne Taylor.
“By June 2010 when the applicants (Guma TAC) started negotiations, the Golden Lions had lost all their 2010 Super Rugby games and all their matches in the less competitive domestic Currie Cup competition,” Van der Walt stated.
“The applicants’ funding allowed the Lions to pay for the salaries of the players, coaches and staff, to buy international and local players and employ other value adding staff to improve the team’s performance culminating in them winning the Currie Cup in 2011.”
Matters came to a head after Robert Gumede’s Guma Group pulled out of an investment deal with the Golden Lions Rugby Union last June. Reacting to the court application, Golden Lions’ president Kevin de Klerk said yesterday that Guma TAC was entitled to pursue what legal action they chose and the GLRU would defend same.
dewetp@thenewage.co.za
