Back in 2013, the Independent Media Consortium (IMC) was established to acquire Independent Media from its Irish owners. At the time of its formation, IMC was known as Sekunjalo Independent Media (SIM). SIM/IMC functioned as a special purpose vehicle (SPV), entirely distinct from Sekunjalo Investment Holdings (SIH/Sekunjalo), and had no association with Sekunjalo.
The SPV's purpose was to hold a 55% stake in Independent Media in exchange for the consortium's financial contribution. This ownership in Independent Media represented the sole asset of the consortium.
IMC comprised various union groups, including COSATU's investment arm, Kopano, the military veterans' association MKVA, several women's groups, black business groups, and community organizations. SACTWU sought to become a part of IMC with an investment of R150 million, which would have given them an effective 8% shareholding in IMC. SACTWU duly transferred the R150 million through its SACTWU Investment arm.
IMC's investment in Independent Media was fully backed by Sekunjalo. After the final agreement was signed, SACTWU requested to convert their equity investment of R150 million into a loan, citing substantial losses from a failed investment in Trilinear, where they incurred a R400 million loss.
Furthermore, SACTWU initially committed an additional investment of over R250 million, intended to establish a dedicated workers' publication. However, they later withdrew from this commitment. SACTWU's rationale for investing in Independent Media was to ensure that workers had a voice in matters concerning them and to strengthen their existing media investments, which included a shareholding in Hosken Consolidated Investments (HCI), the owners of eMedia holdings (e.tv, eNCA, Open View HD, and eSat.tv).
Notably, HCI's founder is Johnny Copelyn, a former general secretary of SACTWU and a member of Parliament.
In 2017, André Kriel, the general secretary of SACTWU, signed an irrevocable commitment to convert their Independent Media shares into shares in Sagarmatha Technologies. SACTWU received 18 million shares valued at R700 million through this transaction, financed by Sekunjalo via a vendor financing arrangement.
Additional investments that SACTWU made with Sekunjalo have yielded returns, including receiving 12 million shares in Ayo Technology Solutions (AYO) at the time of the ICT company's listing in December 2017. These shares, initially covered by Sekunjalo at R1.50 per share, had a street value of R500 million, nearly three times their investment in IMC.
SACTWU's legal action against IMC extends to other IMC partners, such as Kopano, black empowerment women's groups, and NGOs. Andre Kriel, as the General Secretary of SACTWU, initially signed the contract with IMC for a stake in Independent Media. This initial contract is not under dispute, implying that he possessed the necessary authority to enter into various contracts, including those involving Sagarmatha and AYO.
The signing of the agreement by Andre Kriel constitutes a legally binding contract, where an offer was made with specific terms, and acceptance occurred through conduct. Communication of acceptance is typically required, and silence cannot be construed as acceptance. It should be noted that since SACTWU swapped its shares out of IMC for a stake in Sagarmatha, they no longer hold any rights in Independent Media.
The Independent Media Consortium firmly believes that the courts will rule in its favour and has confidence in the South African legal system to uphold the law.
Closing arguments will be heard in the Western Cape High Court on Tuesday 26 September.
*Adri Senekal De Wet is the executive Editor of Business Report.