Business

Mercantile, Hassim deny colluding to sink Alert Steel

2017-07-15 23:22

Mercantile Bank has vehemently denied that it intentionally collapsed Alert Steel when it recalled a 72-month R104 million loan two months after granting it.

Portuguese-owned Mercantile Bank and Rayhaan Hassim – and his alleged shelf company West Lake Trade and Investments – are being sued by Alert Steel, which is in liquidation for R351 million for allegedly colluding to liquidate it.

Alert Steel and ArcelorMittal have filed court papers at the Johannesburg High Court, instituting what may be a landmark corporate legal battle.

According to the court papers, the bank and Hassim plotted and colluded to appropriate all of Alert Steel’s assets for their own benefit at the expense of other creditors.

Hassim, who was at the time a shareholder of Alert Steel, is accused of also being an owner of the company West Lake, to which the assets were transferred for an undervaluaton of R100 million.

Hassim denied that West Lake was one of his companies.

Mercantile Bank chief executive Karl Kumbier rejected the allegations of the conspiracy, and has vowed to fight tooth and nail against the allegations in court.

“The bank acted in the correct manner in both granting the loan and in terms of recovery following normal banking practice to recover the loan amount as per the terms and conditions stipulated in the agreement,” he said.

Kumbier confirmed that the bank entered into the agreement on March 6 2014 and recalled the loan on May 9 2014.

“Mercantile proceeded to call in the loan on May 9 after the bank was informed that Alert Steel’s shareholders, Southern Palace and Cannistraro Investments, were revoking their financial support of Alert Steel and that the board of Alert Steel had made a resolution to place Alert Steel in business rescue.

"These actions were in breach of the bank’s standard terms and conditions applicable to loans of this nature.

"The bank’s agreement with Alert Steel included such terms and conditions that provided that the loan could be called in under these circumstances.

"The bank acted within its legal rights in response to a breach of the loan agreement,” Kumbier said, adding that the bank even worked with the business rescue practitioner for two months to try to find a buyer for all or a part of Alert’s business.

Hassim issued a statement dismissing the allegations as unfounded and also vowed to fight the issue in court.

ArcelorMittal SA declined to comment.

“This matter is currently before the courts, therefore ArcelorMittal SA is not at liberty to comment further or provide any further details,” ArcelorMittal spokesperson Themba Sepotokele said.

Mercantile Bank is now for sale.

“The bank does not have prospective buyers yet. A tender process still has to be undertaken.

"This process will only commence once the Portuguese government signs a decree approving the official sale of Mercantile Bank to commence,” Kumbier said.

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November 19 2017