A FINAL liquidation order was granted last week against a company tasked with recovering millions of barrels of crude oil stashed underground by the apartheid government.
Absa brought the liquidation application against Uwoyela Environmental Services (UES), a company owned by Durban businessman Terry Rosenberg and his family.
The bank, led by advocate Dees Ramdhani SC, argued that UES was unable to pay its debts and was “commercially and factually insolvent”.
Thoba Portia Poyo-Dlwati, acting KwaZulu-Natal Judge President, granted the final winding-up order on March 4.
UES, previously known as Enviroshore Trade and Logistics, which is a subsidiary of the Rosenberg-owned Oakbrook Holdings, received work orders from the Strategic Fuel Fund (SFF) to remove sludge and reclaim more than five million barrels of crude oil.
The precious commodity was at the Ogies Mine in Mpumalanga province.
According to previous media reports circulated by Africa Intelligence, an online publication, UES raised support from various backers, including Absa and overseas investors, providing multi-million dollars of funding.
But the SFF project, awarded to UES in 2013, never got off the ground.
The Africa Intelligence article stated that the SFF lent UES 300000 barrels of crude oil around 2015, which the company sold to a Swiss-based concern for $14.65m (R225m).
With UES unable to honour the terms and conditions of the loan arrangement, the SFF eventually terminated the contract, and also refused to release the 300000 barrels of crude oil which the Swiss company had paid for.
Africa Intelligence reported that a Singaporean-based company also provided UES with backing of nearly $40m (R600m) for the project, not knowing that the SFF contract had been terminated.
Absa’s liquidation application was based on UES’ debt of nearly R50m, for an overdraft facility, excluding interest charges.
Apart from one instalment paid in February 2020, UES made no other repayments.
The bank noticed that UES struggled to service its debt obligations in spite of being granted many time extensions.
A letter of demand was served on UES in June 2021, but payment in full or a suitable arrangement was still not received from UES.
The provisional liquidation application was heard in August 2021.
A UES director submitted an affidavit and stated that the company was in negotiations with a funder who could provide R1 billion.
On September 30, the company brought an urgent application to postpone the final liquidation sitting, but was not successful.
After the provisional liquidation order was granted, Absa received letters of support from some UES creditors. Absa said there were no special or unusual circumstances that justified a denial of the final winding-up order.
In response Rosenberg said the Covid-19 pandemic made it difficult to raise capital. “A number of investors have been engaged over the past two years and due diligence followed with real hope of a positive outcome.”
Rosenberg insisted they did not use stalling tactics. He said it was important to understand the background to this “complex” project.
“The first order of business was to understand where the remaining oil for the recovery project was sitting, which was in an area covering 8km², 40 to 60m deep.
“A significant amount of time and capital was spent in third party contracts and equipment, utilising advanced technology to determine where and how much oil was available,” he said.
Rosenberg explained that finding the oil, quantifying and working out how to extract and process it, using their unique engineered technology and competent persons were the steps that needed to be followed.
“The project has had a number of challenges over the past few years in ensuring the technology and competent persons were available to successfully execute.
“With time spent developing the project more capital was required to ensure operations could continue and immediate recuperation of capital would follow.
“With the pandemic hampering the last raise, and a committed effort by shareholders to raise capital, the liquidation order has jeopardised the project moving forward,” he said.
Regarding the other allegations highlighted in the Africa Intelligence reports, Rosenberg said they required a longer time frame to provide a comprehensive response with the correct detail.
“We’ve given what we could, considering the tight time period and availability of skills. We are not in any way trying to avoid the media, we just want to provide the correct response,” he said.
SUNDAY TRIBUNE