Evraz Highveld Steel and Vanadium, the vertically integrated steel and vanadium slag producer, has launched an urgent High Court application against financial services provider Sasfin Bank.
Evraz said in a statement on Monday that in the application, which was submitted to court on Friday (22 May 2015), the company’s appointed business rescue practitioners (BRPs) requested to obtain an order against Sasfin to release the debtors ceded to Sasfin to enable the BRPs to procure funding from the Industrial Development Corporation of South Africa (IDC).
The dispute relates to an invoice discounting agreement that was terminated by Sasfin when Highveld’s business rescue proceedings started on April 13, 2015.
Highveld disputes that Sasfin is entitled to retain the debtors’ book of Highveld after having collected all the capital and interest outstanding on the facility. In addition, Sasfin has also imposed R36 million (including Vat) in penalties arising from its cancellation of the agreement and have retained R35 million collected from the Highveld debtors, which penalties are disputed by Highveld.
Highveld has tendered to pay under protest the outstanding amount claimed of less than R1 million, as this amount is reflected on the latest Sasfin statement, provided that Sasfin releases the cession of debtors.
This tender was refused by Sasfin and has resulted in the urgent application being launched, Evraz said in the statement.
Evraz says it will institute a separate action against Sasfin shortly to set aside the purported penaties and recover the amounts concerned.
The steel producer says that these actions have severely compromised Highveld’s ability to access the cash flow required to save the business and has potentially prejudiced the conclusion of a loan arrangement with the IDC, which requires Highveld to first procure the unconditional release of the cession of debtors.
Sasfin is required to respond to the application by 17:00 on Monday (25 May 2015) and the application is due to be heard on Thursday 28 May 2015.